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Tom Bundervoet, Rescue Print
Friday, 09 March 2012, 12:15 - 13:15

Tom Bundervoet, International Rescue Committee

Do Village Savings and Loans Associations Really Work ?  Evidence from a Randomized Controlled Trial in Burundi

Abstract: One of the most persistent criticisms of formal microfinance is that it fails to reach the ultra-poor. In recent years, Village Savings and Loans Associations (VSLA) have become increasingly popular as a means to provide basic financial services to poor, isolated and credit-constrained rural villagers. Advocates claim, often unsubstantiated, that Community Based Savings Groups effectively lift people out of poverty and transform entire communities. In this article we examine the impact of a VSLA intervention in rural Burundi. The intervention was randomly rolled out, which enables us to estimate treatment effects using an experimental control group. The results show that VSLAs were effective in providing basic financial services to the unbankable and significantly increased consumption and assets of participants. Relative to the controlgroup, households that participated in a VSLA experienced an increase of 7 USD in monthly consumption expenditures per capita. While poverty headcount among the control households increased with 10 percentage points-following the general trend in Burundi-the incidence of poverty decreased with 4 percentage points for the treatment households. Simulations show that the estimated treatment effects are robust to various missing data scenarios. 

Location: R42.2.113
Contact: Claude Adan, This e-mail address is being protected from spam bots, you need JavaScript enabled to view it