Researchers are evaluating whether incentives to save are effective at increasing savings levels and whether these higher savings levels persist after the incentives are removed. 

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Can improved toilet facilities, combined with innovative accountability systems for maintenance, increase the use of community toilets in urban India?

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While the accountability and inclusiveness of institutions are often considered key determinants of economic performance, there is little agreement about how institutions should be designed. Researchers evaluated the impact of a community-driven development program in Sierra Leone designed to establish more inclusive and accountable local decision-making infrastructure by providing villages with small development grants to be allocated by village committees.

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Major bank mergers in the last few years have highlighted the debate about the effect of bank concentration. This debate has been extensively studied in the finance literature without conclusive results. While some studies find that bank concentration reduces access to credit, deters economic growth, and increases unemployment, others find that bank concentration increases access to credit, and can foster economic growth.

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Conditional cash transfers have proven effective as incentives for the extreme poor to visit a health clinic or send their children to school. But are such programs sustainable? If the cash assistance is taken away, will families find themselves back where they started before the program? In this study, researchers evaluate if financial education and business training can help recipients graduate from a conditional cash transfer program, and what type of training is most beneficial.

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Researchers designed and piloted a program called Borrow Less Tomorrow (BoLT) that took a behavioral approach to debt reduction, combining an accelerated loan repayment schedule with peer support and reminders. Results from a sample of free tax-preparation clients in Tulsa, United States suggest a strong demand for debt reduction: 41 percent of those offered BoLT used it to make a plan to accelerate debt repayment.

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The vast majority of new HIV infections occur in sub-Saharan Africa, where nearly 2 million people become infected with HIV/AIDS every year. This randomized evaluation examines the impact of two HIV prevention strategies among youth in Kenya: voluntary counseling and testing for HIV (VCT) and condom distribution.

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While primary school enrollment has risen sharply around the world, the quality of education remains low in many countries. Researchers examined whether increasing community oversight and participation could improve education outcomes in Uttar Pradesh, India.

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In Mexico, the financial intermediary Caja Nacional del Sureste (CNS) observed that it was transferring a large amount of remittances to their clients but that very little savings was captured from this flow of money. Researchers partnered with CNS to investigate whether requiring clients to sign a non-binding agreement to save a predetermined amount of each remittance received could increase saving.

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How do migrants decide how much money to send home in remittances? Would they like to have some control over how much of the money is spent and how much is saved? This study offered a variety of special bank accounts to migrants from El Salvador living in Washington DC, offering the sender varying degrees of control over an account held in the receivers name. Migrants offered greater control sent significantly more.

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This research examines whether bank marketing and communication tools can help individuals save more and, in particular, switch from informal savings vehicles to formal sector methods (e.g., a bank account). In conjunction with Caja Municipal de Ica (CMI), IPA examines various methods of product design, beyond the financial incentive, of encouraging clients to complete their savings commitment.

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Village Savings and Loans Association members meet

Village Savings and Loans Associations (VSLAs) are thought to play a critical role in bringing financial services to rural areas of developing countries, where access to formal financial services is typically very limited. However, evidence on the impact of these groups has been sparse. In Ghana, Malawi, and Uganda, Innovations for Poverty Action worked with researchers and CARE to rigorously evaluate the impact of VSLAs on rural households.

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Previous research suggests that many people lack the skills needed to calculate expected returns or present discounted values, which may cause them to make suboptimal financial decisions.  Previous work by Hastings and Tejeda-Ashton in Mexico showed that the way that returns to a pension program were presented (in pesos versus as an annual percentage) affected price sensitivity.  Another explanation offered for sub optimal financial decisions is the present bias of many decision makers, who a

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Credit markets in developing countries can be hampered by a lack of basic financial mechanisms, such as the ability to screen loan applicants to improve repayment rates. Researchers evaluated the effect of (a) simple text message reminders and (b) financial incentives on borrowers' loan repayment. These methods had similarly positive effects, which suggests that the text message reminders may be a more cost-effective intervention.

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An informal savings group meeting

To understand the potential gains from formal banking, we must first understand the risks and returns that the poor face from financial-service options in the informal sector. Yet, while informal financial products dominate the financial lives of the poor, we have scant data and analysis on either informal savings or informal debt.

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Microfinance has generated worldwide enthusiasm as a potential answer to economic development and poverty reduction. But high default risk and unproductive use of loaned funds plagues many programs. Researchers worked in Peru to measure the marginal impact of adding business training to a group lending program. The results of this study found business training slightly improved business practices, but had no impact on key business outcomes such as revenue and profit.

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Poverty, lack of female empowerment, and lack of education are major risk factors for childhood illness worldwide. Microcredit clients randomized to an educational intervention showed greater knowledge about child health, but no differences in child health outcomes compared to controls.

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One of the most famous innovations of microfinance was the idea of “social collateral” – a way to guarantee the loans of people who have limited physical assets. However, it’s not clear that requiring group liability is actually a good thing. For instance, it can drastically raise the cost of a loan for a good client if she is forced to cover for other loans. Furthermore, it can force someone to guarantee people who take out much larger loans, which may prove to be impossible.

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