guy stuart financial education impact - world...
TRANSCRIPT
Financial Education Innovations and Impact
April 28, 2015Guy Stuart, Ph.D.Executive Director, Microfinance Opportunities
INTRODUCTION
Key Questions1. What problems can financial education address?
2. What challenges exist for financial education?
Examples of Impact
• Knowledge and Skills– Know how to save– Understand the uses of credit– Awareness of different types
of financial products– Ability to understand terms
and conditions of products– Ability to make interest rate
calculations– Know how to put together a
budget– Know how to track income
and expenses
• Behavior– Save more– Borrow less– Use more financial products
– Choose cheaper products
– Shop around for loans and borrow from cheapest lender
– Follow a budget
– Track income and expenses
AttitudesSelf-Efficacy
The Financial Capability Gap is large and likely to grow
Lack of capability directly impacts consumers’ ability to access and benefit from financial services
63%
37%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Mobile Money Subscribers
Inactive Active
The Challenge: A Capability Gap
Recipients of Financial Capability
TrainingReceived Training: 100 Million Consumers
Need Training: 500 Million Consumers
Costs to Scale
WHAT WE KNOW ABOUT IMPACT
Overview
• Financial literacy predicts financial behavior• One study of studies showed that financial
education had limited impact on literacy and behavior (Fernandes and others, 2013)– Limited number of studies deliberately evaluating FE
impact• More recent study of studies by World Bank
researchers found that FE does have an impact on literacy and some behaviors (Miller and others, 2014)– Highlighted saving and record-keeping
Financial Education in Schools
• Classroom education can result in improved knowledge and behavior, if done right
• Bank of Italy study of effect of financial education on school children showed positive increases in knowledge (2008 to 2012)
• Federal reserve study of states’ variations in provision of financial education in high schools showed positive impact on credit scores
• World Bank study in 868 high schools in Brazil showed improved knowledge and increased savings
Financial Education out of School
• Out-of-school youth and adults harder to reach and more expensive
• Trade off: depth, breadth, and cost• As a result, there have been many innovations
in delivering FE to adults
INNOVATIONS AND IMPACT
Common Characteristics
• Timely– “Just-in-time” content– Reinforcement
• Relevant• Simple
– Intuitive design– Rules of thumb and other methods
• Interactive, at three levels:– With the content– With peers– With an educator
Recent Innovations
• Text messages• Embedded education• Online education
TEXT MESSAGES
Innovations for Poverty Action Studies
• Savings reminders experiment – (Karlan et al., 2014)– Bolivia, Peru, Philippines– Messages that mention both savings goals and financial
incentives are particularly effective• Loan repayment experiment
– (Karlan and Zinman, 2012)– Text messages did not help with repayment rates except
when the name of the loan officer was mentioned• Rules of thumb for business accounting experiment
(Drexler et al., 2011)
Juntos
• 2-way, automated SMS conversations • Partners with banks & MNOs offering financial
services to the mass market & low income• Colombia: a bank offering a mobile savings
account to the newly banked, the Juntosgroup had 50% higher savings balances and a 33% higher active client rate compared to the control
EMBEDDED EDUCATION
MFO Embedded Consumer Education: Zambia
Results from Zambia
South Africa Soap Opera Call to Action
ONLINE EDUCATION
Online Education
• Benefits– Scalable– Interactive at all three levels– Always available and self-paced
• Challenges– We still don’t know what works– Access for low-income and marginalized
populations
Revolution Credit
Revolution Credit’s Impact
FINAL THOUGHTS
FE is a Gateway to a Client-Centered Approach
Innovations and Impact
• Timely– “Just-in-time” content– Reinforcement
• Relevant• Simple
– Intuitive design– Rules of thumb and other methods
• Interactive, at three levels:– With the content– With peers– With an educator
