Paper

Microfinance and Savings Outreach: What are We Measuring?

Estimating the number of empty savings accounts at MFIs and banks in several countries
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This paper looks at how MFIs and banks in Bolivia, Nicaragua, and Pakistan, as well as cooperatives among a mix of countries worldwide report their savings data. It gathers data on the account ownership and savings activity and performs a comparison between the dormant and empty accounts. It also studies whether deposit accounts serve as vehicles for savings or transactions. The paper makes the following observations:

  • About 50-75% of savings accounts are empty, while balances of non-empty accounts are at least double the average reported size;
  • Rather than reaching a broad base of traditional microfinance clients, many MFIs are reaching a substantially smaller number of families in the lower middle class and above;
  • Institutions with a mission to serve the poor may not have an incentive to close empty accounts: on the one hand, they can be used to maintain contact with the client and, on the other, they help show better outreach figures;
  • Most commercial banks wouldn't normally see the same benefits for keeping empty accounts open as they don't have (or need to measure) the financial inclusion objectives of many MFIs.