Savings Strategies: Evidence from Bangladesh

Microsavings contribute to smooth consumption, cope with emergencies and increase the welfare of poor households. We use data from an original survey administered to a sample of Bangladeshi women, all members of a small microfinance institution (MFI), to analyze the individual socio-economic characteristics associated with microsavings. The data show that the poor are financially sophisticated and use several different (formal and informal) savings devices. We also highlight a positive association between the length of the relationship with the MFI and the propensity to save, especially with formal and semi-formal devices. While we cannot identify a causal effect of MFI membership, the descriptive evidence is consistent with the hypothesis that microfinance may contribute to the awareness of the potential benefits of savings and expand access to alternative formal savings devices.