YouthSave researchers gathered recently in Washington, D.C., to discuss what they learned over five years about how to provide scalable saving mechanisms to low-income youth—and what their findings could mean for youth development and financial inclusion.
The discussion included the findings of YouthSave’s Savings Demand Assessment in Colombia, Ghana, Kenya and Nepal, and the results of a longitudinal experimental impact study in Ghana.
Since 2010, YouthSave has been investigating whether low-income teens can build savings, and if it matters for their futures, in Colombia, Ghana, Kenya and Nepal. Young people in those countries saved more than $1.8 million during the YouthSave initiative, one of the largest scientific studies of youth savings on people ages 12 to 18.
An important factor that aided them in opening accounts was “taking the bank to the youth,” said Lissa Johnson, YouthSave data systems architect and administrative director of the Center for Social Development (CSD), a partner in the project. In all four countries, bank outreach to schools and youth clubs resulted in a higher number of opened accounts at participating bank branches and schools compared with nonparticipating branches and schools.
“It’s really easy for the youth to access and open accounts when the banks are coming to the schools, especially in rural areas where branches may not be readily available,” Johnson told the October 9 gathering at the City Club of Washington. “It makes a lot of sense to reach the youth where the youth are.”
In all four countries, younger youth tended to save more than older youth, Johnson said. “As they get older, the kids have more expenses, and the parents and guardians may be expecting them to take care of themselves.” She also noted that parental involvement is an important influence. “The youth are more likely to save if the parent is the co-signer.”
Gina Chowa, director of Global Social Development Innovations and associate professor of social work at the University of North Carolina at Chapel Hill, presented about the Ghana Experiment. Chowa is also lead faculty director for Global Asset Building at CSD.
For the experiment, researchers selected 100 schools in the bank’s footprint of eight regions. Then they randomly assigned 50 schools to the treatment group and 50 to the control group.
Within the treatment group, they used two interventions, Chowa said. The first was marketing outreach: Officials from HFC Bank visited the schools and explained the youth-tailored account, and they invited the students to come to the bank to make deposits and to conduct other transactions. The second was in-school banking: Bank officials introduced the accounts and also set up mini-banks in the schools for students (Click here for more findings from the experiment).
During the experiment, 21.1 percent of the student population in the in-school banking schools opened accounts. In the schools with marketing outreach only, 11.4 percent of the students opened accounts. In the control schools, 0.3 percent of students opened accounts.
The differences represent “a meaningful impact on increasing youth financial participation,” according to the report “YouthSave 2010-2015: Findings from a Global Financial Inclusion Partnership.”
In assessing the savings of those students who opened accounts, researchers found that the average monthly net savings among “savers” at in-school banking schools was $2.06 in U.S. dollars, also statistically higher than students receiving only marketing services or no services. “At these rates, net savings amounts would be up to USD 25 on an annualized basis,” according to the report.
“These are meaningful amounts for school-aged children in Ghana. If this amount were to be saved year after year throughout primary school, total savings could be a substantial contribution to costs for secondary schooling.”
Supported by The MasterCard Foundation, YouthSave investigated the potential of savings accounts as a tool for youth development and financial inclusion in developing countries by co-creating tailored, sustainable savings products with local financial institutions and assessing their performance and development outcomes with local researchers.
The project was an initiative of the YouthSave Consortium, led by Save the Children in partnership with CSD, the New America Foundation and the Consultative Group to Assist the Poor (CGAP).