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Saving Groups (SGs) are an important driver for saving mobilization and credit, and thus effective vehicles of social and economic change for vulnerable groups. Hence understanding which factors help them perform successfully is crucial, especially regarding their peculiarities as informal organizations. This study focuses on one essential factor, group composition diversity. By identifying which group are homogeneous (melting pot) or heterogeneous (salad bowl), the paper examines how compositional diversity in groups affects the performance of SGs. The study uses lens of faultline theory and data from 688 Savings Groups belonging to the largest disability inclusive savings group program (iSAVE) in Uganda. Econometric results show that demographic and functional faultlines and their combination have statistically significant positive effect on profit generating capacity of SGs (Return on Savings). This may imply that strong subgroup attachments or alignments along multiple demographic and functional attributes are a melting pot in informal institutions and thus a potential source of efficiency. Therefore, in promoting group composition in informal institutions, homogeneity should prevail over heterogeneity.
