Effects of Financial Incentives on Saving Outcomes and Material Well‐Being: Evidence From a Randomized Controlled Trial in Uganda

Abstract

The use of savings products to promote financial inclusion has increasingly become a policy priority across sub-Saharan Africa, yet little is known about how families respond to varying levels of savings incentives and whether the promotion of incentivized savings in low-resource settings may encourage households to restrict expenditures on basic needs. Using data from a randomized controlled trial in Uganda, we examine: 1) whether low-income households enrolled in an economic-empowerment intervention consisting of matched savings, workshops, and mentorship reduced spending on basic needs and 2) how varied levels of matching contributions affected household savings and consumption behavior. We compared primary school-attending AIDS-affected children (N = 1,383) randomized to a control condition with two intervention arms with differing savings-match incentives: 1:1 (Bridges) and 1:2 (Bridges PLUS). We found that: 1) 24 months post-intervention initiation, children in Bridges and Bridges PLUS were more likely to have accumulated savings than children in the control condition; 2) higher match incentives (Bridges PLUS) led to higher deposit frequency but not higher savings in the bank; 3) intervention participation did not result in material hardship; and 4) in both intervention arms, participating families were more likely to start a family business and diversify their assets.

Cost-Effectiveness of a Savings-Led Economic Empowerment Intervention for AIDS-Affected Adolescents in Uganda: Implications for Scale-up in Low-Resource Communities

“…As outlined in detail in another manuscript (24), Bridges PLUS children showed a higher likelihood to save and made more deposits as compared to Bridges children, in both the first and second intervention years. However, the actually amount of savings was near equal between intervention arms in the first year and Bridges children showed a higher monthly amount of savings, on average, as compared to those in Bridges PLUS .…”

“…A longer term follow-up may yield different outcomes since adolescents in the Bridges PLUS group do accumulate more matched savings than Bridges children (24). We do not know how different the outcomes would be – in the long-run—once adolescents in the two intervention groups start to use their matched savings for educational or microenterprise development.…”

“…Data are derived from in-person interviews with adolescents and school administrative records. The in-person interviews were conducted annually by trained research assistants (21, 24, 29, 30). School attendance and examination performance data come from school records and unannounced roll-calls conducted by the program staff post-baseline assessment.…”

“…During the meetings, potential participants were given study details. Informed consent of the primary caregiver and assent of the adolescent were obtained before enrolling any adolescent into the study (24). During the first year of study implementation, 27 participants were found to have been included in error through the schools’ administration records.…”

“…Results from these matched CSA programs demonstrate a reduction in levels of depression and hopelessness (18); improved HIV preventive attitudes and behaviors (19, 21); improved self-concept and educational achievement (22); and increased financial resources (23, 24). These findings are in line with prior research of transfers (CCT) which have shown positive effects on adolescents (25).…”