Microsavings and Market Saturation: The Evolution of Diversity in Saving Products

Abstract:     
Saving behavior influences economic development in many possible ways. The paradox of thrift stresses the negative effects of increased individual savings. How does this relationship transfer to microfinance and to microsavings in particular? Based on savings data of differently developed countries, we investigate the relationship described by the triangle of the availability of saving products, savings behavior, and development. The data supports the assumption of the proposed saturation triangle that with an increased number of MFIs active in a country, the average deposit per MFI decreases. Furthermore, the savings product saturation of a country is linked to economic as well as social developments.

Number of Pages in PDF File: 29

Keywords: saving deposits, microfinance institutions, developmental research, technological change

JEL Classification: O22, O47, R11

working papers series