Paper

Testing Savings Product Innovations Using an Experimental Methodology

Assessing product impact - The importance of random experimental methods
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This paper provides a detailed operational guide to assess the broader impacts of a new financial product by using experimental methodologies. It advocates a rigorous scientific approach to the evaluation of innovations in micro-savings products. It argues that:

  • Such evaluations can help:
    • Microfinance institutions (MFIs) have a clearer sense of why certain products are successful while others are not;
    • Researchers and policy makers investigate the mechanisms and incentives involved with successful savings mobilization.
  • Randomized evaluations are not for all MFIs, as they involve a large degree of planning and resources.

The paper describes:

  • What is involved in carrying out a randomized evaluation design once a savings product has been developed?
  • How to design and implement appropriate survey instruments to analyze accurately the welfare impact of savings innovations?
  • A case study of the Green Bank of Caraga, in the Philippines to clarify the steps for product implementation and assessment.

The authors conclude that:

  • This guide is for microfinance organizations interested in learning about specific impacts of new products that are new and promising, but unproven;
  • There is little empirical research about the relative merits of one product design relative to another;
  • Valid product design testing must be done within organizations;
  • Rigorous experimental designs can inform microfinance organizations and donors about what works and what does not;
  • This should be in addition to qualitative research that helps design innovative solutions.

About this Publication

By Ashraf, N., Karlan, D., Yin, W.
Published