When is a Savings Account not a Savings Account?

In this short Note, Ahmad Jazayeri, explores the difference between “transaction accounts” and “accumulation accounts” particularly from the perspective of clients and argues that microfinance institutions supplying one product that mixes savings and loans together are disadvantageous to the client. He mentions the effect of minimum balances that must be held in accounts, blocked savings and spreading costs across clients regardless of how much they transact, as being contributory to this. The point is made that requiring savings to access a loan may have slowed the development of a “saving culture” amongst both staff and clients. He suggests that financial institutions should invest in helping clients to start with “transacting accounts”, keeping costs low, and then let them grow into genuine savings or “accumulation accounts”.

  • Resource type
  • Author Jazayeri, A.
  • Year of Publication2006
  • Region
  • LanguageEnglish

Related Resources