The Effect of Promoting Savings on Informal Risk-Sharing: Experimental Evidence from Vulnerable Women in Kenya

Abstract

An increase in savings can lead to substitution away from informal risk-sharing arrangements (IRSAs), which can reduce the capacity to manage risk. We conduct a field experiment that promoted mobile bank savings among vulnerable women in Kenya. The savings promotion increased mobile bank savings and reduced risk-sharing. However, we show that reduced risk-sharing did not reduce the capacity to manage risk. Promoting savings directly improved the ability of women to cope with negative shocks, and had no adverse spillover effects on the untreated.