Impact of village community banks on household’s saving, investment and welfare in Kilosa district, Tanzania
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Date
2023
Authors
Journal Title
Journal ISSN
Volume Title
Publisher
The University of Dodoma
Abstract
Village Community Banks (VICOBA) has been acknowledged to contribute on livelihood improvement among informal saving and lending groups. Yet there are debates about its impacts on sustainable saving, income generation and welfare of the participants, that saving and investment of members distinct from their groups have remained poor and no clear delineation of impacts on these vital outcomes. This study adopted cross-sectional design to examine the impacts of VICOBA membership on saving, investment and welfare status of the households in Tanzania. Using primary survey data from a randomly selected sample of 99 VICOBA members and 203 non-members in Kilosa District, the study employed Propensity Score Matching (PSM) and Endogenous Switching Regression (ESR) Quasi-experimental impact evaluation methods. The PSM results showed that Average Treatment effect on Treated (ATT) was positively significant at 1% on investment, and monthly income spent on household consumption (indicator of welfare) at 5% significant level, while it was positive but differed significance on saving across matching algorithms. After controlling for bias from both observable and unobservable covariates, ESR method confirmed the findings and further showed that even ATT on saving was positively significant though marginally. It concludes that VICOBA membership has positive impacts on household savings, investment and welfare, so VICOBA provides behavioral practice and aspiration to save and invest. The study also has implications for policy makers and development partners, suggesting that the government should improve the operational system and have legal and regulatory framework to help local government authorities monitor, regulate and integrate fully these groups into development plans and activities at the local level. This can provide easy and effective link between government’s credit schemes and unbanked low-income segments of the population because the groups are clear, less cost and ease to manage and operate.
Description
Master Dissertation (MA Economics)
Keywords
Village Community Banks, sustainable saving, income generation, welfare, Propensity Score Matching
Citation
Ismail, J. (2023). Impact of village community banks on household’s saving, investment and welfare in Kilosa district, Tanzania, (Master's Dissertation) The University of Dodoma.