What Drives Profits in Savings Groups? Bayesian Data Mining Evidence from the SAVIX Database

Rolando Gonzales Martínez, Bert D’Espallier and Roy Mersland

Review of Development Finance Journal, 2021, vol. 11, issue 2, 39-57

Abstract: Savings groups provide savings and loans to low-income individuals in rural and peri-urban areas. This study applies Bayesian data mining methods to a database of more than 200,000 savings groups with the aim of identifying which micro, meso, and macro factors are associated to profit generation in the groups. The results show that the facilitation mechanisms of development agencies and the macro-economic environment are more important than internal group dynamics for profit generation. The findings suggest that the focus of development agencies on bottom-of-the-pyramid groups creates wealth for communities in countries with a more dispersed and rural population. However, the generation of profits depends on the graduation of groups and the facilitation model implemented by a development agency.

Keywords: Savings groups; development agencies; Bayesian model averaging (search for similar items in EconPapers)
JEL-codes: C11 G21 O12 (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:afj:journ3:v:11:y:2021:i:2:p:39-57

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