Savings Constraints and Microenterprise Development: Evidence from a Field Experiment in Kenya
University of California, Los Angeles (UCLA) - Department of Economics
University of California, Santa Cruz
NBER Working Paper No. w14693
Does limited access to formal savings services impede business growth in poor countries? To shed light on this question, we randomized access to non-interest-bearing bank accounts among two types of self-employed individuals in rural Kenya: market vendors (who are mostly women) and men working as bicycle-taxi drivers. Despite large withdrawal fees, a substantial share of market women used the accounts, were able to save more, and increased their productive investment and private expenditures. We see no impact for bicycle-taxi drivers. These results imply significant barriers to savings and investment for market women in our study context. Further work is needed to understand what those barriers are, and to test whether the results generalize to other types of businesses or individuals.
Number of Pages in PDF File: 40working papers series
Date posted: January 31, 2009
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