Savings Groups: Model, Welfare and Design
Loading...
Authors
Tremblay, Frederic
Date
Type
thesis
Language
eng
Keyword
financial inclusion , macroeconomics , savings group , development economics , heterogenous agent , optimal interest rate
Alternative Title
Abstract
Savings groups (SGs) are a low-cost way of providing access to financial services to the most marginalized in the developing world. We develop a model of SGs—a Bewley-Huggett-Aiyagari-type heterogenous agent model—that captures the main distortionary features of VSLA-type (Village Savings and Loan Association) SGs. Calibrating the model to data from Uganda, we find that SGs provide benefits equal to 1.38% of consumption (consumption equivalent variation; CEV) or US$2.76 (financial value; FV) per member per month relative to autarky, which easily justify the low implementation costs. The optimal interest rate on borrowing is found to differ significantly across measures of welfare, with the CEV peaking at 2.46% at an interest rate of -9.5% and the FV peaking at US$2.77 at an interest rate of 4%. Alternative designs of SGs are considered. Loosening the cash-flow constraint by al- lowing members to repay their loans using their share-out equity increases the CEV to 1.76% and the FV to US$3.04. Finally, a continuous SG design that eliminates the share-out cycle and its associated distortions raises the CEV to 3.86% and the FV to US$6.75.
Description
Citation
Publisher
License
Queen's University's Thesis/Dissertation Non-Exclusive License for Deposit to QSpace and Library and Archives Canada
ProQuest PhD and Master's Theses International Dissemination Agreement
Intellectual Property Guidelines at Queen's University
Copying and Preserving Your Thesis
This publication is made available by the authority of the copyright owner solely for the purpose of private study and research and may not be copied or reproduced except as permitted by the copyright laws without written authority from the copyright owner.
ProQuest PhD and Master's Theses International Dissemination Agreement
Intellectual Property Guidelines at Queen's University
Copying and Preserving Your Thesis
This publication is made available by the authority of the copyright owner solely for the purpose of private study and research and may not be copied or reproduced except as permitted by the copyright laws without written authority from the copyright owner.