A recent development in the field of microfinance has been the promotion of a specific model of savings groups intended to create a basic and sustainable system of financial intermediation by training members to operate using a lockable box, passbooks and rules regarding their operations. The model seeks institutional change through the implementation of this set of rules and procedures to achieve transparent and accountable operations. However, institutional change is not a straightforward process and how effective institutional change occurs has also become an increasing concern of the development literature. This thesis therefore examines how effective and sustainable the institutionalisation of these rules in Savings Groups has been in Kenya, using recent theories for analysing institutional change. The focus is on understanding and explaining the variation in how the institutionalisation of new rules in such groups actually takes place. The evidence reveals a high degree of variation in how the rules were practiced, in the sustainability of the groups and the institutionalisation of the rules. The analysis examines the role of social relations and political power among group members and between groups and trainers in the outcomes produced. The theories employed all identified important but different dimensions of the institutional change process, in particular the necessity of having certain types of rules (Ostrom, 1990); the role of those with political veto power (Mahoney and Thelen, 2010); and the importance of culture and its relationship to external intervention (Boettke et al. 2008). The thesis argues that the insights of these theories need to be more systematically brought together by paying greater attention to the role of social and power relations, social norms and culture as well as how external intervention influences dynamics of institutionalisation. It concludes that savings group interventions which offer a “cookie cutter” approach to institutionalising rules are unlikely to produce sustainable results across a range of socio-cultural and political contexts