Savings Facilitation or Capital Injection?

Policy makers grapple with the optimal design of multidimensional strategies to improve poor households’ livelihoods. To address financial constraints, are capital injections needed, or is savings mobilization sufficient This paper tests the direct effects and local spillovers of three instruments to relax financial constraints, each combined with micro-entrepreneurship training. “Cash grants” and “cash grants with repayment” directly inject capital, while “village savings and loan associations” (VSLAs) promote more efficient group saving. The randomized controlled trial took place in western regions of Côte d’Ivoire that were affected by a post-electoral crisis in 2011 and an earlier conflict. The interventions had differential effects on the dynamics of savings and productive asset accumulation. The cash grant modalities generated investments in startup capital, although nearly 30 percent of the grant was saved. In contrast, village savings and loan associations did not increase total savings but gradually induced investments, so that productive assets caught up with cash grant recipients after 15 months. Positive local spillovers on savings and independent activities were also observed. Yet, investments in independent activities were not sufficient to increase profits, possibly because they were limited due to high precautionary saving motives in the post-conflict study setting.

Bibliographic Details

Main Authors:	Marguerie, Alicia, Premand, Patrick
Format:	Working Paper biblioteca
Language:	English English
Published:	World Bank, Washington, DC 2023-09-12
Subjects:	CASH GRANT, SAVINGS, LIVILIHOOD INTERVENTIONS, POVERTY, GRADUATION PROGRAMS, ECONOMIC INCLUSION, POST-CONFLICT INTERVENTION, TRANSFERS,
Online Access:	http://documents.worldbank.org/curated/en/099439409082319139/IDU016356e4e01f4704759089a00b05060f249c1 https://openknowledge.worldbank.org/handle/10986/40339
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