November 1, 2023

Promoting Financial Inclusion: The Power of Prize-Linked Savings Accounts

Clara Williams
Written byClara WilliamsWriter
Researched byAishwarya NairResearcher

Today, only about half of adults in developing countries have quick access to funds for unexpected expenses, and 1.4 billion people are unbanked, meaning they have no accounts at any financial institution.

Promoting Financial Inclusion: The Power of Prize-Linked Savings Accounts

The Disconnection from the Financial System

This disconnection from the financial system has various causes, including lack of trust in banks and limited access to banking services. Lack of savings is a significant issue worldwide, as households are unable to save as much as they would like. Saving money under the mattress is common, but it often leads to increased spending rather than long-term savings.

The Importance of Savings Deposits

Savings deposits are not only crucial for individuals but also for banks. Approximately three-quarters of bank lending worldwide is financed by deposits. However, in developing countries, banks struggle to attract deposits due to a large number of unbanked individuals and low-income populations.

Encouraging Savings and Account Opening

To encourage people to save more money and open savings accounts, prize-linked savings (PLS) accounts have emerged as a promising solution. PLS accounts are a type of financial product offered by banks and credit unions worldwide. Account holders receive a ticket for a cash-prize drawing for every amount they save, incentivizing both saving more and opening savings accounts.

The Impact of Prize-Linked Savings Accounts

Research on the effectiveness of PLS accounts with lottery-type incentives is limited. To address this gap, a study was conducted in partnership with a Mexico-based bank. The study found that offering cash incentives through PLS accounts increased the number of new accounts, deposits, and the overall savings stock at each branch.

The Study

The study involved 110 bank branches, with 40 branches randomly assigned to offer PLS accounts and the remaining branches serving as a control group. Account holders earned one lottery ticket for every 50 pesos (US$4) of new savings, with monthly cash prizes of 400 pesos (US$31) and two larger prizes of 10,000 pesos (US$777).


Promoting financial inclusion and encouraging savings is crucial for individuals and banks alike. Prize-linked savings accounts have shown promise in increasing savings and account opening. Further research and implementation of such accounts can contribute to a more inclusive and accessible financial system.

About the author
Clara Williams
Clara Williams

Clara "LottoLore" Williams, a Kiwi with a zest for numbers and narratives, dives deep into the thrilling world of lotteries. As a leading writer for LottoRank, her pieces resonate with enthusiasts, offering a harmonious blend of data, history, and human interest.

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