Testing Savings Product Innovations Using an Experimental Methodology

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.