Felipe Dizon from the University of California - Davis gave a seminar on his research titled “Does Financial Inclusion Exclude? The Effect of Access to Savings on Informal Risk-Sharing in Kenya”. His study focuses the effects of access to savings on one’s risk-sharing network.

“The success of micro-savings initiatives is driven by these novel technologies that rely on insights from behavior economics and advancements in mobile money technologies”, said Felipe Dizon. Micro-savings have recently begun to play a bigger role in the financial inclusion movement that provides “formal financial services to those who do not have currently access to those services,” as Dizon explained.

“What I do in this paper is that I consider the effect of micro-savings initiatives through informal risk-sharing arrangements (IRSAs)”, said Dizon. An IRSA, he explained, is a network of family, friends, and contacts that individuals rely on when they experience a financial shock, such as a health emergency. While many studies have sought to prove the positive benefits of savings, Dizon took different approach.

His study uses a random control trial methodology with data from 627 vulnerable women in Kisumu, Kenya, that were randomly assigned to a treatment or control group. The treatment group included a micro-saving program that covered the enrollment in a mobile money savings account, a session in which women set savings goals and the receipt of weekly SMS reminders about these goals. The goal was to measure the effect of savings on the likelihood of an individual being willing to share risk.

After statistical analysis, Dizon concludes that, “access to savings reduced informal risk-sharing”. After the intervention took place Dizon found in the data that women with access to the micro-savings program reduced the potential value of transfers received from and sent to her risk-sharing partners by 21% and 28%, respectively. For Dizon, this finding shows that although savings is generally beneficial, serious considerations should be made about its effects on existing informal institutions.