The senior economics and finance double major studied how the Village Savings and Loan Associations microfinance program impacted the social and economic lives of South Sudanese refugees and Ugandan citizens in Northern Uganda.
Name: Regina Mendoza '19
Majors: Economics and Finance
Faculty mentor: Steve DeLoach, professor of economics and chair of the Department of Economics
Title of research: The Impact of Village Loan and Savings Associations (VSLAs) on South Sudanese refugees and Ugandan citizens in Northern Uganda
The purpose of this research is to determine the economic and social impacts of participation in Village Savings and Loan Associations (VSLAs) on South Sudanese refugees and host citizens in Northern Uganda. This is valuable as there is little research on the impact of savings in Sub-Saharan Africa or research that focuses on the VSLAs on refugees and the effectiveness of microfinance on refugees. We collaborated with a nongovernmental organization called Seed Effect to assess the impact of their VSLA program. The survey, administered by Seed Effect, assessed the impact of savings and loans in the overall quality of life of the participants. It looked at social factors such as number of children in school and economic factors such as value of the participant’s animal assets. Regression estimates show that refugees tend to borrow more, specifically on school fees, than non-refugees. Furthermore, an increase in the amount participants are allowed to save in each period decreases the ability for many participants to save and borrow, limiting the positive impact of the VSLA. The results suggest that Seed Effect could increase their impact by limiting the value of each share chosen by savings groups.
In other words:
I looked at how a microfinance program, Village Savings and Loan Associations (VSLA), impacted the social and economic lives of South Sudanese refugees and Ugandan citizens in Northern Uganda. This was done through the analysis of survey data from a pre-program survey and a post-program survey.
Explanation of study/potential impact of findings:
This research will make several contributions to the literature. First, it will add to the sparse literature on the effectiveness of savings on a household’s ability to accumulate assets. Second, it will contribute to the literature on the effectiveness of microfinance on refugees.
One interesting result is that refugees borrow more than Ugandan citizens as they had less access before the microfinance program. Providing access to borrowing to refugees may have long-term effects as they are using them for school fees. Another interesting finding is that as “shares” or weekly saving amount gets higher, participants borrow less. This may suggest that a higher share discourages saving. We recommend that VSLA programs limit the share size in the future, as to allow for more saving.
Why did you pick this topic?
I have always been interested in behavioral economics. I wanted to focus my research on why people do what they do and wanted to contribute to international economic research. Grace O’Hara, an Elon alumna, had partnered with Seed Effect, the nonprofit organization which offers VSLA access in Uganda, for her Honors research and recommended I continue with this research as there were many more questions to be answered. This research aspect in microfinance was exactly what I was looking for as I could focus on behavioral economics.
How has your mentor impacted you/your research process?
Dr. DeLoach’s expertise in microfinance and mentoring students has been invaluable. First, he has been so helpful in my understanding of microfinance, the theory and the results. He has been a great mentor as he has helped me better my writing skills and analytics skills. His constant feedback in my writing helped me improve my academic writing more than before. Dr. DeLoach also taught me how to further develop my skills in Stata. I could not imagine working on this thesis without Dr. DeLoach as he has trusted me in the process to create my own research project. He has been guidance throughout the whole experience.