Working Paper Series

Prompting Microfinance Borrowers to Save: A Behavioral Experiment from Guatemala


  • Alain de Janvry, Goldman School of Public Policy, University of California, Berkeley
  • Jesse Atkinson,
  • Craig McIntosh, University of California at San Diego
  • Elisabeth Sadoulet, University of California at Berkeley


  • Goldman School of Public Policy Working Paper (April 2011)


We report on an experiment in which new commercial savings products, informed by the
behavioral finance literature, were offered to the microfinance borrowers of Guatemala’s largest
public-sector bank. We find that giving these borrowers the opportunity to plan, and be reminded
of, saving at the time of loan repayment resulted in a doubling of savings deposits relative to the
control, and that proposing a default contribution of 10% of the loan payment caused deposits to
double again. The savings treatments also generate faster pay-down of debt and weakly better
overall repayment performance, suggesting that simultaneous savings and borrowing can be
complementary activities. A theoretical model shows that the simultaneous provision of debt and
commitment savings products helps a greater fraction of the population to eventually escape a
debt-financed equilibrium. Mainstreaming the most successful product tested here would allow the
bank to mobilize savings sufficient to leverage 50% of its short-term loan portfolio.

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