Uptake, Use, and Impact of Islamic Savings: Evidence from a Field Experiment in Pakistan

Abstract

This study examines the take-up, use, and impact of Islamic savings accounts for poor Muslim clients of an MFI in Pakistan, using a randomized controlled trial. We specifically focus on the impact of opening Islamic savings accounts on women’s empowerment. The main results strongly suggest that a successful intervention to increase uptake of savings among a sample of mainly poor, Islamic women needs to address a combination of economic external constraints (being illiterate, facing credit constraints) and internal constraints, shaped by religious and cultural barriers. We find strong evidence that women who have opened savings accounts obtain more bargaining power with respect to health and marriage-related issues. Moreover, they display a much higher degree of self-esteem, which may provide a basis for gaining more bargaining power relative to their spouses or parents. Thus, an active policy that motivates poor Islamic women to open savings accounts may be an effective strategy to kick-start a process of women’s empowerment.

Keywords: Islamic savings, Uptake, Usage, Impact, Religious speech, Account opening subsidy, Assistance; Encouragement Design; Pakistan; Women’s empowerment

JEL Classification: C93, D14, G21, G40, G51, O12, O53, Z12.