Commitment Savings Accounts for Agricultural Workers
IPA / Equity Bank Kenya · Kenya · 2008
Summary
The Equity Bank Kenya commitment savings experiment found that farmers who were offered accounts where they could restrict their own withdrawals until a planting-season date saved dramatically more than those offered standard accounts. The 82% savings gain translated into 37% more spending on agricultural inputs (seeds, fertilizer) and 22% higher output. The mechanism is intertemporal self-control: farmers know they will face spending pressure before planting and use the commitment device to protect savings from themselves. The finding established commitment savings as an evidence-based product category now deployed by microfinance institutions globally.
Research question
"Can commitment savings accounts — where withdrawals are restricted until a savings goal is met — increase savings and investment among smallholder farmers?"
Methodology
Intervention
Smallholder farmers randomly offered ROSCA-linked commitment savings accounts with self-imposed withdrawal restrictions; control group offered standard savings account
Assignment
Randomized controlled trial (household)
Sample size
771 households
Primary outcome
Savings balances; agricultural input investment; output
Effect estimate
Commitment account holders: +82% savings relative to controls; agricultural input expenditures +37%; output +22%
Decision
Product scaled to 3 other Kenyan banks; model adopted in Malawi, Philippines, and Bolivia
Result
Positive
Commitment account holders: +82% savings relative to controls; agricultural input expenditures +37%; output +22%
Evidence strength
Strong
Randomized trial, replicated across multiple sites or studies.
Replication status
Replicated
Institution
IPA / Equity Bank Kenya
Location
Kenya
Year
2008
Policy area
Financial Services
Mechanism
Commitment device