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The positive impacts of savings are not only financial
In its blog, the CGAP research centre which is a leading research centre on microfinance, looks at the impact other than financial, in this case social and behavioural, of savings.
The researcher Ben Shell, referring to his experience in Women’s World Banking (a network of 40 MFIs present in 28 countries), puts forward the idea that saving develops will power and a sense of responsibility by virtue of the principle of “delaying gratification”. “Increased savings is associated with a number of positive outcomes including higher educational aspirations and a higher sense of self worth” confirms the researcher, hence making a link between finance and psychology.
In a totally different vein, the economist Gregory Chen has a hypothesis, taking the example of the Grameen Bank in Bangladesh that savings could: provide microcredit institutions with a measure of protection from political interference:
“In hotly contested democracies interest rates and repayment terms can be manipulated as an instrument of populist politics. Should it be such a big surprise that credit extended to large numbers of poor people offers an irresistible temptation to lower interest or relax repayment discipline?” writes Gregory Chen.
But when a microfinance institution (MFI) also holds the borrowers’ savings, he adds, this temptation is more delicate and even counter productive, since it would put the MFI as such, in peril.