Encouraging Savings Behavior through Conditional Cash Transfers: Lessons from Latin America
Keywords: savings, conditional cash transfers, Latin America, financial inclusion, economic development, program evaluation
AbstractSavings, in the form of financial capital held in formal bank accounts, are an important factor in reducing poverty. They can stimulate financial inclusion of the poor, protect against unforeseen shocks, and fund long-term investments in human and economic development. However, the poor have limited options for formal savings. In recent years, governments around the world have begun to incorporate savings into their conditional cash transfer interventions. This paper focuses on such interventions by national and municipal governments in Latin America. While the evidence base is still too small to draw any firm conclusions about short-term benefits or long-term effectiveness, there have been positive outcomes from pilot projects and adapted savings-linked conditional cash transfer programs in some countries. To ensure successful program design and implementation, governments interested in savings-linked conditional cash transfers should make sure to fully assess the political, economic, regulatory, and infrastructural conditions present in their communities.