Continuing the conversation about “financial inclusions” in Latin America – onto Mexico

In IMTFI's PERSPECTIVES blog series, IMTFI’s International Board members and affiliated researchers take on the definition of financial inclusion. This series aims to foster an open dialogue on issues around money, technology, and financial inclusion for the world’s poor. Individual contributions reflect contributors' own reflections on recent events based on their research and areas of expertise. The topic of financial inclusion will conclude with a capstone white paper by IMTFI titled "Mobile Money: The First Decade."

By Magdalena Villareal, CIESAS Occidente, Maria Elisa Balen, Universidad Nacional de Colombia and Soléne Morvant-Roux, University of Geneva

"What I haven’t yet understood is what this business of financial inclusion is really about… and more importantly, is there anything new?"

This was the important question posed by Dr. Lourdes Angulo-Salazar at the end of the first day of the seminar, "Current Dilemmas Concerning Financial Inclusions," which took place in Guadalajara, Mexico on May 14 and 15, 2017. While it might seem to be a curious question to end with, there are two aspects of the ongoing dialogue during that day’s discussions that she captured with her intervention.

On the one hand, there continues to be a productive skepticism with regard to the explicit goals of financial inclusion and how these are informed by underlying objectives, whether in terms of governance, the favoring of particular financial industries - or both. Yet on the other hand, such doubts were also complicated through the variety of perspectives and case studies offered by presenters in the seminar.

Audience at the seminar. Photos by Saúl Justino Prieto Mendoza.

“Financial inclusion” seems to be on everyone’s lips these days, in different countries in Latin America and beyond. But it means different things. For one presenter, financial inclusion implied an unquestioned policy target akin to bancarization, one predominantly envisioned as a vehicle for positive “economic and social development.” For another, financial inclusion was the problematic reification of social hierarchies through interest rates. A third presenter inscribed financial inclusion within a genealogy of failed development remedies prescribed sometime after the microcredit crisis, wondering whether “financial inclusion” is merely another diversion from more pressing discussions we should have about the need for structural change in our economic systems. However, other presenters discussed the ongoing need for financial inclusion in the context of an explosion of alternative currency projects in Brazil, or concerns about deportation policies under the Trump administration in the US. Without a reliable way to send their savings home, Mexican migrants increasingly fear that deportation could entail the complete loss of their savings, not only through physical deportation, but also through restrictions on keeping accounts remaining in the US in their own names, irrespective of whether they are in Mexico or the US. Given the complexity of these dilemmas, what financial inclusion is (or should be) about is far from settled, as Lourdes’ concluding question reminded participants.

Such lively discussions generated a great atmosphere for the seminar, organized by CIESAS (Center for Advanced Research and Postgraduate Studies in Social Anthropology), IMTFI, and the University of Geneva, with the aim of launching a regional IMTFI satellite in Latin America.

Participants included members of policymaking bodies such as Carlos Alberto Moya, Regional coordinator for the Alliance for Financial Inclusion (AFI) and Nancy Esthela Conde from the Central Bank of Ecuador, as well as academic practitioners such as Mariana Carmona and Isabel Cruz from the Mexican Association of Social Sector Credit Unions (AMUCSS) in Mexico, and Leandro Morais from UNESP (Universidade Estadual Paulista) from Brazil. Alexandre Roig from the University of San Martín in Argentina, Solène Morvant from the University of Geneva, Maria Elisa Balen from the National University of Colombia, Ursula Dalinghaus from IMTFI, Clement Crucifix from the University of Louvain in Belgium, and Enrique García and Magdalena Villarreal from CIESAS in Mexico rounded out the panels and provided a range of interdisciplinary scholarly perspectives.

In what follows, we highlight three key issues discussed in the event. (Presentations can be watched in full on the CIESAS Occidente channel of YouTube.)

1) Discrepancies between visions of financial inclusion 

While bancarization (as a tool for promoting financial inclusion) is acknowledged as useful for the poorest segments of the population, the strategies identified for implementing financial services exhibit different patterns. Carlos Moya and the Alliance for Financial Inclusion are promoting financial inclusion as part of an international agenda that should be approached via national strategies that take into account industry perspectives. Moya insists that financial inclusion must be included in government policies, that regulatory frameworks should be put in place, and that monetary incentives could be offered to encourage proper operation of financial markets. “The challenges Latin American governments face vis-à-vis financial inclusion,” he says, “include promoting capillarity in financial services within rural sectors, adopting the concept of green finances, and eliminating the gender gap in the use of financial services.”

In the same vein, Nancy Esthela Conde, from the Central Bank of Ecuador spoke of her country’s efforts concerning digitalization and its effects. Ecuador has implemented a host of new financial services such as efectivo desde mi cellular (cash from my cell phone) as a means of payment and other monetary transactions. As of May 2017, more than 335,000 accounts had been opened through this digital money platform, and transactions totalled more than $8.4 million. She argued that government should continue promoting financial inclusion in addition to financial education and the protection of consumers’ rights. This includes constant improvement of security systems related to electronic financial services.

Leandro Morais also noted in his presentation the role of governments in the development of financial services. He highlighted how, in the case of organizations and services associated with the solidarity economy, different political views of successive Brazilian governments affect these processes in nonlinear ways.

Problematizing the notion of “a single financial industry and separate national spaces,” Isabel Cruz’s presentation concerning migrant workers in the US who are “sending money home” detailed calls for grassroots social banking. These efforts involve working closely with migrants to account for the specific contexts faced by this vulnerable population segment in multiple countries.

Presentations by Solène Morvant and Mariana Carmona, Maria Elisa Balen and Enrique García highlighted that beyond the usage of formal financial services–be they digital or not–populations in Mexico and Colombia continue to combine a plurality and diversity of monetary and financial practices. These are embedded in socio-cultural logics that do not obviously match the criteria for ‘modern’ financial practices. They find that instead of a narrowing of financial repertories, these new forms of financial inclusion extend them.

Enrique García and Clement Crucifix. Photo by Saúl Justino Prieto Mendoza 

While financial inclusion is presented as a neutral socio-economic policy, then, most participants agreed that it was important to inquire into the underlying social conflicts and not lose sight of how financial relations are social and are thus embedded in power asymmetries.

Alexandre Roig made such relations explicit in his closing talk about state practices in Argentina, where the State plays a key role in improving access to financial markets for the workers belonging to the so-called “sector popular”.

2) The digital vs. cash frontier 

One of the main issues traversing financial inclusion (or inclusions, as some of us would have it) is digitalization. Digitalization implies the deployment of specific infrastructures and a change in the cost of moving money around whose impact can be variable, as Maria Elisa Balen noted in her presentation. No less important, digitalization carries with it the idea of enhanced possibilities of intervention on account of the electronic traces that it produces. No wonder, then, that digitalization figured in presentations on subjects ranging from the practices of microcredit bureaus to geopolitical discussions.

Clément Crucifix reported on his ethnographic study of a credit bureau in a Mexican microfinance organization. He described how field staff spend most of their time looking at information gathered on borrowers displayed on screens instead of interacting with them in person. As a result, such information is subject to manipulation, sometimes in flagrant ways, by agents who are seeking to achieve their targets. At the same time, the credit information recorded in such platforms transforms subjectivities outside of the credit bureau. Thus, credit agents’ practice of seeking out ‘trustworthy’ people in the locales that they visit and asking them to refer them to others–sometimes even taking out loans for those others–engenders not only ‘financial creditworthiness’ as a new kind of capital, but also chains of influence that are used for electoral purposes. Digitalization therefore produces effects that extend well beyond the individual represented on the electronic platform.

Beyond the politics of digital accounting records, there is also the issue of money’s circulation in digital form. Ursula Dalinghaus talked about a new episode in the “war on cash” in the context of demonetization in India and the ongoing push to promote digital financial inclusion by eliminating cash. Drawing on differences in cash usage even in so-called developed markets in Europe, she noted how a preference for cash over digital money is not explained in terms of how ‘advanced’ or ‘developed’ an economy is. She highlighted how various factors influence cash-usage and preferences, such as past experiences of hyperinflation and economic change in Germany or household strategies in the informal economy in India, and whether or not people trust in the state or monetary institutions to guarantee the stability of value for the future. Beyond delineating arguments and available evidence in the digital vs. cash discussion, where a focus on money laundering and terrorist financing in relation to cash has become prominent, she called attention to the framing of the debate. Why is it that the coexistence of cash and digital money is now being framed as problematic and even coined in terms of a war between two sides? This question, just like the one concerning the "true implications” of financial inclusion, remains open. (Read Dalinghaus's white paper: Keeping Cash: Assessing the Arguments about Cash and Crime)

3) Re-politicizing research on financial inclusion and the future of the regional research center

One of the aims of the Latin American regional research center is to create a space for dialogue between academics and practitioners on different forms of money and financial inclusion and the social relationships that these entail. The seminar was successful in laying a foundation for this dialogue with a participative and engaged audience.

The audience included a representative from PROSPERA, the national program for social policy, which oversees conditional transfers for the lower income population and other financial inclusion initiatives. Members from Financiera Nacional de Desarrollo Agropecuario, Rural, Forestal y Pesquero, and DIF (Desarrollo Integral de la Familia in Jalisco, one of the main social policy departments of the state government), were also present. NGO representatives, students, and researchers also participated in the seminar.

Through the IMTFI satellite we hope to continue these endeavors. We are interested in developing cross-disciplinary dialogues where complex theoretical issues can be discussed interactively with diverse participants, from practice-oriented researchers, to policymakers, to scholars, among many others. Such dialogues might take the form of panel discussions and seminars, or joint publications and other forms of dissemination. We are particularly interested in developing and organizing collective research projects involving different countries and diverse sectors of the population.

Magdalena Villareal is an international board member of IMTFI and senior researcher and professor at the Mexican Center for Advanced Research and Postgraduate Studies in Social Anthropology (CIESAS Occidente). 

Maria Elisa Balen is an international board member of IMTFI and an affiliated researcher at the Universidad Nacional de Colombia. 

Soléne Morvant-Roux is an international board member of IMTFI and Assistant Professor at the University of Geneva.

What Are the Effects of Adding Credit and Insurance To a Conditional Cash Transfers Program in Mexico?

Manuela Angelucci, Carlos Chiapa and Silvia Prina 

Recent research suggests that chronic complexity and stress inherent in the lives of the poor can impede and hamper financial decision-making. Due to pressing short-term needs of the here and now, forward-looking behaviors, such as investing in education and health, may not get prioritized by the poor. Even with the knowledge and means, making changes in behavior (such as more time parenting or other healthy activities that could have far-reaching consequences) is challenging due to the lack of adequate resources.

Since a major source of anxiety in the life of the poor is related to financial complexity and uncertainty, for our project we assumed that simplifying the financial lives of the poor would create favorable circumstances for them to recognize the longer-term benefits of and willingly invest in their children’s education (through parenting and schooling) and adopt healthy behaviors. In addition, we anticipated that making the financial lives of the poor more straightforward would have a positive effect on their welfare.

Our focus group interviews with poor households in Mexico corroborated past research in showing that financial instability and emergencies are a major source of stress and anxiety. Therefore, for our target population we hypothesized that access to credit and insurance would improve the ability to cope with immediate shocks and that, in turn, these gains might promote the psychological well being of the poor and favor investing resources in education and health. We also had two more specific hypotheses: (1) recipients of the conditional cash transfer plus credit and insurance would have better parenting and higher adherence to healthy habits than recipients of only the basic conditional cash transfer; (2) experiencing unexpected income shocks reduces healthy habits and quality of parenting by adversely affecting psychological health, but this is less so for recipients of the conditional cash transfer plus credit and insurance.

We tested these hypotheses using as our target population the recipients of PROSPERA (formerly known as Oportunidades), Mexico’s flagship conditional cash transfer anti-poverty program, which covers approximately 25% of the Mexican population. This is a policy-relevant target population for two reasons. First, because conditional cash transfer programs targeting the poor are implemented in at least 33 countries worldwide and serve 90 million people in Latin America alone. Second, because the typical conditional cash transfer program requires its recipients to have regular health checks and provides them with health and nutrition education, both of them free of charge. Therefore, we target a population that has neither knowledge nor financial constraints to the adoption of health behaviors, but rather those whose mental wellbeing may be hurt by the stress and complexity of their lives.

The recipients, almost all women, received cash transfers in a bank account every other month. In addition, a subset of participants received additional benefits from a financial inclusion module called “Programa Integral de Inclusión Financiera ‘Prospera más con BANSEFI” (PROIIF), a supplemental program that provides beneficiaries with additional benefits at below-market prices. In particular, the main objective of PROIIF is to improve PROSPERA’s beneficiaries’ formal financial inclusion. Through PROIIF beneficiaries have access to the following products: an additional savings account (Ahorro Más con BANSEFI); two lines of credit at an interest rate substantially below market levels (Crédito Básico Más con BANSEFI and Crédito Más con Ahorro); a life insurance policy at a discounted price (Seguro Más con BANSEFI); and additional benefits (Paquete de Beneficios Adicionales BANSEFI).

To test hypothesis (1), we compared healthy habits, parenting, children’s schooling, mental health, cognition, stress and total household income of PROIIF and non-PROIIF households. The difference in outcomes for PROIIF and non-PROIIF recipients identified the average treatment effect of PROIIF under the assumptions that (i) PROIIF affects only its recipients and not other subjects (e.g., it rules out spillover effects of PROIIF) and (ii) there are no systematic differences between PROIIF and non-PROIIF recipients.

The first assumption is likely to hold because PROIIF and non-PROIIF recipients were geographically distant from each other. Therefore, spillover effects are unlikely. To check the validity of the second assumption, we compared the predetermined socio-economic characteristics of PROIIF and non-PROIIF recipients and their households. We find that these two groups of recipients and their households are fairly similar.

Figure 1. shows that healthy habits, parenting, children’s schooling, mental health, and cognition do not differ between PROIIF and non-PROIIF beneficiaries, thus rejecting our first hypothesis.

Figure 1.

To test hypothesis (2), we compared the healthy habits, parenting, children’s schooling, mental health, and cognition of households that have and have not suffered from unexpected shocks in the previous 14 days prior to the interview date. Since the experience of unexpected shocks may not be random, as poorer and more vulnerable households are more prone to suffer these shocks, we restricted the sample to households who had experienced at least one unexpected shock in the previous 12 months. Therefore, the variation that we exploited was in the timing, and not the experience, of these shocks. 

The difference in outcomes for households that were hit by an unexpected shock in the previous 14 days and households that experienced these shocks in the previous 12 months (but earlier than two weeks before the interview date), identified the effect of unexpected shocks under the assumptions that (i) the shocks affect only their recipients and not other subjects and (ii) there are no systematic differences between households that experienced the shocks sooner and later. 

Spillover effects of these shocks are unlikely, as only 7.16 percent of the sample experienced shocks in the previous 14 days prior to the interview date and these households were geographically spread out, so the data supports the first assumption. Moreover, the socio-economic characteristics of the two groups of households were similar, and consistent with the second hypothesis. 

Figure 2. shows that transitory and more permanent shocks reduced the income of PROSPERA’s beneficiary households by similar magnitude as the effects on income were not statistically different from each other. Permanent shocks did not consistently or overall significantly reduce adherence to healthy financial habits. Similarly, we see no effects on schooling or parenting, or on parental aspirations and expectations for their children’s schooling. 

Figure 2.

Further analysis shows that the magnitudes of the shocks of more permanent and transitory shocks on the outcomes of interest are not statistically different for PROIIF beneficiaries. There are two exceptions. First, receiving PROIIF attenuates the negative effects of experiencing transitory income shocks on household income. Second, while receiving PROIIF does not attenuate the negative effects of experiencing more permanent income shocks on income, it increases the amount of time desired to spend with children. 

Overall, findings from our data indicate that recipients of the conditional cash transfer plus credit and insurance do not seem to have better parenting and higher adherence to healthy habits than recipients of only the basic conditional cash transfer. In addition, while it is the case that experiencing unexpected transitory income shocks reduces income, the magnitude of the effect is lower for recipients of the conditional cash transfer plus credit and insurance. Finally, when experiencing more permanent income shocks, the quality of parenting by increases for recipients of the conditional cash transfer plus credit and insurance.

Read more in Angelucci, Chiapa and Prina's Final Report

"Financial Practices on the Borderlands (la línea) in times of Crisis" in Human Organization

What are "informal" currencies? How do people transact using both formal and informal currencies? What economic and social calculations do these financial practices entail, for women in particular? For more, read Magdalena Villarreal and Lya Niño new article in Human Organization, "Financial Practices on the Borderlands (la línea) in times of Crisis" based on their IMTFI-funded research on women who frequently travel back and forth between two border cities in Mexico and the United States!


Article Abstract:

Financial practices are not only about money. This paper discusses how people living and working in the Mexico/United States borderlands weave their economic lives by combining, associating, and disassociating formal and “informal” currencies. We base our analysis on transactions carried out by women who commute regularly between the twin cities of Mexicali and Calexico, detailing their financial practices; the frameworks of calculation they employ; and the social, cultural, and financial mechanisms they and their families use to cope with their daily lives. These include the use of monetary and non-monetary calculations and resources, different types of indebtedness and forms of reciprocity. Such findings reveal mistakes in the tenets upon which much anti-poverty and financial aid programs are based. A focus on people's use of particular calculations, resources, and social relations will help substantiate better alternatives that can be implemented in supporting their economies.

Read more on Magdalena Villarreal's research with IMTFI:

Project #1: Juggling Currencies in Trans-Border Contexts: Mexico/US 

Related blogpost for this research "Juggling Currencies in Trans-Border Contexts (Intro)"  

Not to be missed--their rich and insightful video:
"Juggling Currencies Across Borders (Mexico/US): An Ethnographic Film" 

Project #2: Generating, Storing and Exchanging Value: Comparing Financial Practices in Mexican and Indian Rural Communities

Alumni Session Panel of the 2016 Conference

The final panel of the first day not only focused on long-term work done by returning IMTFI scholars but also emphasized the ways that multiple approaches and methodologies may involve creating media or technologies other than money itself.  These forms of creative production often entail implementing a variety of design decisions and user testing scenarios for these novel instruments.  (Recently IMTFI has made its own Consumer Finance Methods Research Toolkit available online, as well as an explanatory document IMTFI Trust and Money: It's Complicated, so the researcher as product designer is a paradigm that they model actively.)  Although at the end of the day IMTFI head Maurer was joking about scenarios in which "a journalist, an anthropologist, and an economist go into a bar," the interdisciplinary benefits of multiple rounds of IMTFI funding and the cross-training of research cohorts has been no laughing matter.

"IMTFI's X Factor: Applying and Translating Innovative Research" was introduced by longtime social computing researcher Scott Mainwaring, who has been with IMTFI from the beginning and facilitated by discussant Divine Fuh of the University of Cape Town.  The session started with "How Research Can Make a Difference Locally: The Case of Overseas Remittances in the Philippines" by Jeremaiah Opiniano who -- self-deprecating comments abut his background as a journalist aside -- detailed the history of three rounds of funding for the RICART (Remittance Investment Climate Analysis in Rural Hometowns) tool, which analyzes "where overseas Filipinos from rural hometowns can best invest their money."

As Opiniano pointed out, regulations intended to inhibit money-laundering could negatively impact vulnerable countries, which he saw already affecting remittances.  He explained how researchers focused on rural areas because "that is where most of the overseas migrants come from."  He lauded the value of working with an economist so that quantitative and qualitative methods.  He explained how his tool repurposed a World Bank survey but how being physically present in the study site was critical in order to understand practices of community engagement.  Currently the group is working in Guiguinto, and he showed several ways that community members were interacting in public events. For example, he discussed how members of Family Circle were "trying to discover themselves" as participants. He praised an approach that emphasizes phenomenography, which maintains an empirical orientation but deeply engages with questions of human experience by focusing on differences in different people's experiences and thus looking at the locality's remittance investment climate with individual descriptions of personal understanding.

He acknowledged that his continuing study has faced several challenges, including the reluctance of participants, the closure of banks, and obstacles to keeping up with demands for regulation,  Moreover, "some of them are friendly, and some of them are not."  He affirmed the value of working with an economist "to connect the dots" by putting data sets together and tracking regressions, which depends on moving from a QUAN-qual to a QUAN-QUALbalance that incorporates how levels of socio-economic development differ by using a competitiveness index.  (For more about toolkits, you can check out this World Bank Trade Competitiveness Index.)  His presentation was deeply grounded in pragmatic engagements, from considering how the cost of electricity and cost of the services of financial systems might be ranked to planning incentives such as raffle prizes or groceries for participants.  He looks forward to sharing views on his findings as the conference proceeds.

"Translating Research into Product Design:  Interactive and Innovative Financial Education Modules to Improve the Financial Behavior of Targeted Populations in India" by Deepti KC opened with a fundamental question: "do we really know the financial lives of women?" She described how she designed a study that followed the financial lives of 25 women, which used "some promotional materials and financial literacy tools", but primarily focused on changing the mode of interaction from talking to listening.  In this study she found that all of the women appeared to have separate sources of income and were hiding money, mostly in the kitchen, often from husbands.  Although the women's lives might include the disruptions of banknotes eaten by vermin and domestic violence catalyzed by discovery of money caches, she wanted her work to honor their ingenuity and resourcefulness.  In explaining the lack of pursuit of being banked among women, she noted that banks might not accept their small savings or be perceived of as threatening and stigmatizing.  Furthermore, she identified a prevalent bias that ATMs and other uses of technology were for men, which was compounded by a fear of ridicule.  She prioritized using real life stories, because she didn't want to be too preachy.  By providing a meaningful "frame of reference," financial literacy educators treated the materials as prompts for discussion rather than solely didactic.

In considering questions about if financial literacy was enough, she cited an influential study done in Kenya with lockboxes. (Those who would like to consult this research by economists Pascaline Dupas and Jonathan Robinson can read their seminal article "Why Don't the Poor Save More?")  Based on this previous work, she decided to design a simple lockbox and key.   Significant findings concerned how many saving goals were related to a child and how 73% reported discussing household expenses with family after experiencing the interventions.  She noted how this phenomenon could increase with group dynamics and how financial education was enhanced if the educator was a female authority figure that they desired to emulate.  She advocated for having financial inclusion researchers "spend time with women in the field for a long time," because their desires might be "different from what we think they need." In the question and answer session, she also differentiated between "knowledge" and "trust."  Check out this in-depth profile of Deepti K.C., which includes a full interview and an account of a day-long visit to one of her field sites in Bihar.

"Juggling Currencies in Transborder Contexts: Mexico/US" by Magdalena Villareal explained how "video became part of the research."  She asserted the value of comparative work and human factors, since money doesn't travel by itself.  She argued for valuing "social currencies" and "symbolic currency" alongside economic currencies and observed that "one national currency" operates differently in different contexts, as it is "embedded in social scenarios."  In commenting on the rancorous campaign environment debating about the contributions (or costs) of immigrants from Mexico, she reminded audience members that "money often comes back to the United States," because of remittance loops.  As an example, she pointed to the case study of her field site in which there were "constant interactions with Hawaii, even in mountainous regions in Mexico" which extended "to the level of how many chickens are counted" in a day or adoption of foods like pasta with mushrooms.  For researchers, according to Villareal, the challenge is to capture how "flows are not registered" and "uncover the nature of money."  As a producer of media, she also included her subjects in the process by "showing the people part of the footage and having peoples' responses to the footage."

Using the ATM Debit Card to Build Trust and Savings: A Study through Mexico's Oportunidades

by Enrique Seira, from the study "Paying Conditional Cash Transfer Programs in Bank Accounts"

Trust is an essential element of economic transactions. This is especially true for savings where transactions take the form of a promise to future returns. Unfortunately trust in financial institutions appears low across the world and even more so among the poor and less educated. In Mexico, for instance, 25 percent of those with primary school education admitted to having "no trust at all" in banks, while 18 percent of those with more than primary school education expressed some trust in the banks (Gallup World Values Survey). This is not entirely inexplicable, given that in the last 15 years, there have  probably been hundreds of frauds in Mexico which led poor savers to lose all the money they deposited in financial institutions. Researchers have also noted that poorer clients who received assistance in surmounting the initial costs of opening bank accounts often ended up using the account to merely withdraw money from transfers and let the account remain idle the rest of the time. Along with transaction costs, low trust frequently figures as the main reason cited by the poor for not using savings account. Overall, this state of affairs might help us to explain why there is little savings in formal accounts.

In our study we were interested in finding out whether ATM debit cards and mobile banking could potentially alleviate this problem since these technologies potentially lower the cost of monitoring movements in the account and simultaneously increase convenience and access to savings. Ideally, this could be tested using a randomized experiment where we award savings accounts with and without ATM cards randomly. Unfortunately, such a randomized experiment does not yet exist in the given context. Thus, in our study, we look at the effect of giving debit cards to the beneficiaries of a Mexican state conditional cash transfer program Progresa/Oportunidades (now Prospera). The beneficiaries had already received their transfer at a government development bank Bansefi but had not been given a debit/ATM debit card connected to the account. For the study, we have used account level information on more than 300,000 accounts some of which received an ATM debit cards in a staggered fashion.

                              Photo: Will Kay, Flicker, Creative Commons: http://bit.ly/1OVvdtK

At the beginning of the research, we were intrigued in part, by the stories of Oportunidades beneficiaries who complained about money disappearing from their account. We found that this was due to the substantial fees they were incurring by frequently checking their account balances. This was so particularly in the beginning when they did not have any trust in the banks and resorted to making sure that their money was there by checking their accounts several times in a single day. Since there was a transaction cost involved in the process, the beneficiaries lost a substantial amount of their funds in this way. We focused on the increase in the savings account of the group that had received the debit cards. For purposes of comparison, we also had a control group that had not received any debit cards as a part of the program. For analysis, we undertook a differences-in-differences empirical design to approximate the causal effect of receiving the card on savings in the account.

As mentioned in the beginning, we found that when they first got the debit card, customers checked their saving balance frequently, but the frequency of this checking declined over time. Most notably, beneficiaries with more than 6 months with the card checked 57 percent less frequently per bimester. This evidence strongly suggests that initial use of ATM debit cards to frequently check and monitor savings account helps to build up trust. Additionally, the increase in saving was gradual and coincided with the increase in directly elicited trust in the bank account and was not related to the learning curve for the debit card use. We found that in the groups using the debit cards, the savings increased dramatically, almost tripling in a span of 2 years after receiving the ATM card vis-à-vis the control group (without the ATM card). We noted that the increase in trust was contemporaneous with increases in savings amount in the bank account.

In addition, the use of a consumption-income survey showed that the increase in savings in the account comes from new savings and not just from savings shifting. We found that although income did not change, consumption decreased after getting the ATM card. One interpretation of this finding is that the account allows for some commitment to saving and avoidance of "temptation goods" like high sugar foods that would otherwise be consumed. In our final report we lay out some alternative explanations such as mechanical savings where saving increases related to more frequent but lower amount withdrawals, and differential changes due to changes in the amount of the Oportunidades transfer. 

All in all these findings indicate good news. Trust and how to increase trust has not received enough attention in the academic literature. Our results suggest that an existing and simple technology – namely the debit card could increase trust, account use, and savings. Furthermore our findings show that in contexts such as the one examined in this study, the experiment can be easily scaled up. Increasingly, the world over, tens of millions of poor households in dozens of countries currently receive cash transfer programs, more and more into bank accounts. Given the possible benefits, providing ATM cards for these accounts appears to be a worthwhile measure worth ensuring.

The final report of the study on how the ATM card has an effect on trust, savings, and the use of formal savings accounts can be found here.

Moving Research Applications into Circulation: Putting Knowledge to Work

The final session of the IMFTI conference focused on research applications.  "Putting Knowledge to Work" was moderated by discussant Michael Joyce of TNP2K (the Indonesian National Team for the Acceleration of Poverty Reduction) who noted that Indonesia had already opened electronic accounts for a million people receiving government-to-person transfers.  He also thought that IMTFI research would be important in ensuring the success of such programs to get people to actually use the "next generation" full suite of tools realized by leading service providers in places such as Kenya with services such as  M-Shwari that had interest-based saving, credit, and more sophisticated models than existing microcredit paradigms.

The first paper on "Effectiveness and Challenges of Using Mobile Money Service in the Implementation of the Social Assistance Grants for Empowerment Programme: A Case of Kiboga District in Uganda" by Julius Okello and Dorothy Massa of the African Institute for Strategic Research Governance and Development  emphasized a G2P case in the Kiboga District of Uganda. Okello explained that SAGE (Social Assistance Grants for Empowerment) was the first major social protection initiative by the government of Uganda and how it was an arm of expanding social protection under the Ministry of Gender, Labour and Social Development. It received funding for launching its services from DFID, Irish Aid, and UNICEF, and it is also supported by Maxwell Stamp, a UK based consulting firm.  Okello explained that SAGE was a five-year pilot program which started in 2011 in Kiboga, Kaberamaido, and Kyenjojo but was later rolled out to another 11 districts.   Researchers noted that Kiboga has a population of 148,606 people, of which 4,808 citizens, both male and female, participate in SAGE.  SAGE targets elderly citizens, those from intact heritage cultures, and other vulnerable populations.

According to Okello, the MTN mobile money service was launched in the country in March 2009 and has registered 1,553,770 users since. He asserted that this translates into an adoption rate of 64,740 persons per month.  On average the relative market share of MTN Mobile Money, ZAP, and M-Sente between March 2009 and February 2010 was 89.6 percent, 9.1 percent, and 1.3 percent, respectively. Given the history, coverage, and capability of MTN Uganda, the government opted to hire MTN mobile services to remit funds to SAGE beneficiaries.  The use of mobile money in Uganda is still relatively new, according to Okello, however.

Okello's study used a mixed methods approach that combined quantitative and qualitative information gathering and was inspired by Creswell & Plano-Clarks' 2011 manual for researchers.   The Kiboga project was designed to consult about three hundred informants.  Quantitative methods included regression analysis and involved statistical figures, tables, and graphs, while the group's qualitative methods emphasized detailed explanation with evidence about their informants' livelihoods.  He showed a complex circuit of stakeholders in the project, who included the government of Uganda, the Bank of Uganda, development partners, The Ministry of Gender, Labour, and Social Development, the Uganda Communications Commission, MTN, MTN district agents, the district coordinators of ESP, and the SAGE beneficiaries themselves.  Because Uganda is one of the worst countries in the world for corruption, according to Okello, the hope is that this system of checks and balances will protect SAGE constituents.  He also worried about potential complaints from telecommunication companies that might feel "locked out" of participation.

For elderly participants without cellphones, MTN created a variety of devices and services, including this yellow box that performed all of the functional financial operations of MTN transfer services.  Yet MTN has relatively limited coverage outside of the capital, so money sometimes cannot reach the beneficiary and becomes diverted to other parties through corruption and fraud.  Unfortunately researchers found that the elderly are often targets who unwittingly share pin numbers because they are reluctant to travel the distance to the point of contact with mobile money agents or are too gullible when told that machines have broken down. In concluding Okello argued that the elderly could still be vibrant economic actors capable of launching businesses, and he closed with hopeful stories of growing sunflowers, poultry, pineapples, and piglets and an anecdote about how ritual slaughter is combined with the seeming windfall of mobile money.

Another G2P program was featured in "Paying Conditional Cash Transfer Programs in Bank Accounts" by Enrique Seira of ITAM-QFD, and the panel shifted its focus to Mexico, where it was also possible to analyze characteristics of debit card owners and their behaviors as consumers.  Seira noted that in Mexico debit card owners have three times more tertiary education, three times more savings, and more trust in general in society and institutions.  (One Seira survey question asked if informants thought that a lost wallet would be returned to measure such trust.)  Debit card owners tend to live in municipalities with 20% more ATMs per capita.  In contrast, Oportunidades “Debit” beneficiaries, who were not self-selected by their decision to get a card and used accounts relatively little, as described in this earlier IMTFI panel.  Seira noted that they also had significantly less education, and although about 45% claimed to have savings, only about 10% had "formal" savings.  This amount of savings represented about 1/50 the numbers common in the general population.  A comparison of late vs early debit card owners in Oportunidades showed that they were similar, which was good for measuring the impact of debit card expansion, as the cards became able to work in ATMs and be accepted in stores.

Seira claimed that the aspect that influenced the value and use of the account was its convenience, although a savings account with no branch nearby and no card able to pay in POS devices was not very useful.  Unfortunately, this was how Oportunidades (Mexico’s main CCT program) operated pre-2009. Of about 1 million savings accounts, none had ATM/Debit card features.  In 2009, Oportunidades started awarding Debit ATM cards in a staggered fashion. Expansion was decided by Oportunidades at the local level (not by bank branches).

Seira has planned to do a DID analysis of the effect of ATM/debit on savings in recipients' accounts. He noted that his sample was based on data on account savings for 342,000+ beneficiaries of 308 Bansefi branches in 411 municipalities during a period covering 17 bimesters: January 2009 to October 2011 (5 bimesters pre-treatment and 12 post, max).  About 70% of participants received an ATM card during the researchers' sample period.  There were three group studied: early switchers, late switchers, and those who had not yet switched.  The three groups were distributed geographically across the country and included similar distributions of indigenous groups.  Although seemingly counter-intuitive, Seira also posited that debit cards could impact savings behavior positively, because withdrawals could be smaller and done in a more controlled manner.  He acknowledged that yesterday's IMTFI session with Jonathan Morduch reached the opposite conclusion that plastic could encourage more irresponsible spending behavior.  Subjects in Seira's study ultimately saved 30% more than non-implementers, although this behavior often took six months to manifest itself.  It also often followed a pattern of significant variation among users, and research indicated that subjects had relatively low financial literacy regarding ATM use and fees.  He observed that new users also frequently checked balances, because they were distrustful about money remaining in the account.

Researchers also found evidence of early implementation problems, especially involving emigration to debit card accounts.  Surveys were also given to 100+ personnel from ATM providers, and those serving in early adopting municipalities seemed to have less knowledge about training materials.  There were also surveys distributed to 5000+ beneficiaries, which revealed that early adopters (even if they have had more time to learn) needed more help to use ATM card than late adopters (57% vs 50%, 5% significance).  While 32% of early adopters knew they had a savings account, only 30% of early adopters knew (10% significant).  Late adopters did 35% more ATM purchases per bimester.  According to Seira, there seemed to be increasing use and trust with time as well.

The final formal presentation at the IMTFI annual conference was "The Use and Impact of M-Shwari as a Financial Banking Product in Urban and Rural Areas of Kenya" by Jane Mutinda of Kenyatta University and Ndunge Kiiti of Houghton College and Emory University.  You can read more about previous IMTFI research produced by Kitii and Mutinda's collaborations here.  Mutinda credited Professor Charles Nzioka of Nairobi University, who also participated as an author in their findings presented this year.  Monique Hennik of Emory served as a consultant to improve the group's training, because the university students that they used as field researchers came from many different institutions.

Mutinda opened her presentation with a gorgeous and evocative video that explained that the Jua Kali (the word refers to the heat of the sun) were self-employed people working in the informal sector of the Kenyan economy doing 90% of the service work, which included masonry, plumbing, carpentry, metal working, and many artisanal trades.  According to experts shown in the film, this sector also employs about 19 million people and is critical for successful development.  Even the economic commentators described their own experiences as Kenyans in the bankable population as very difficult, so that someone might have to walk dozens of kilometers to make just one transaction.  People in the Jua Kali sector found opening and maintaining accounts particularly challenging, although access to resources, small loans, and savings for small businesses were all among their critical needs.  In the film researchers argued that Safaricom needed to do more outreach and education to explain the product, which was less widely in use in rural areas divorced from cosmopolitan populations of users and which privileged English speakers over those who communicated in Swahili or tribal languages. 

Kiiti took over the presentation after the video to explain the "why" and the "how" of the project, which built on their earlier work in mobile money in Kenya.  They also observed increased use of the M-PESA platform and an expansion of Safaricom bank partners providing mobile money services and products.  In addition to M-Shwari, provided in conjunction with the Commercial Bank of Africa (CBA), Kiiti also noted the existence of M-Kesho with Equity Bank and M-Benki with Kenya Commercial Bank.  Researchers chose to focus on M-Shwari, which was introduced in 2012, because it allowed subscribers to save and borrow from their phones and to earn interest on money saved.  It also provided access to credit and a paperless form of financial transaction.  Nonetheless, more needs to be done to reach the unbanked: apparently CBK has estimated that over Kshs. 300 billion ($3.5 billion) sits outside formal banking systems, and millions of Kenyans are still unbanked.  She noted that 50% of people using M-PESA still did not have a bank account.  Researchers also consulted with Safari.com to attempt to influence policy, although they were wary of possible influence.

Kiiti summarized from research highlights that indicated that M-Shwari loans were "essential in providing quick cash-flow for the Jua Kali businesses."  She also cited a number of strong assertions from those in the financial sector about the power of this product, including Michael Joseph, Director of M-Pesa within Vodafone, who argued that "M-Shwari is a 'transformational service'; saving is no longer the privilege of the elite."  She justified the study's focus on the Jua Kali, by emphasizing the fact that the informal sector contributes about 18.4% of Kenya’s GDP while creating 74% of all new jobs annually, although researchers were sometimes stymied by a lack of data.  She incorporated research done by the Africa Development Bank in her presentation as well, and argued that Kenyans rely on the Jua Kali sector for services and feel strong investments in those communities. She explained that workshops continue to be part of their research study design.

The study trained 15 graduate students and professionals.  Students came from six different campuses and were tested on their cultural/language representation (both vernacular & national).  Their training in a mixed methods approach included role-playing and practice listening, probing, and note-taking, and they included M-Shwari representatives in the process.  8 counties were and 4 regions were included in their fieldwork.  Consent was very important given the nature of the very personal questions asked by researchers about money.   160 Questionnaires were gathered with 10 users and 10 non-users of M-Shwari in each county.   Researchers examined sample characteristics, such as access/convenience, usage, gender, and sectors and found trends that involved social status.  As the research team moves forward they hope that the link/gap between marketing or promotion and knowledge or application could be better addressed if policy and practice questions receive more attention.  Obviously researchers felt that their findings could be very significant for issues of financial inclusion and exclusion in mobile banking in Kenya.

Safe Passage: Making Money Mobile: Remittances and Transnational Financial Practices

The panel on remittances was headed up by moderator Allison Truitt, author of Dreaming of Money in Ho Chi Minh City and an expert on how Vietnam might serve as a model for "new markets, digital telecommunications, and an ideological emphasis on money's autonomy from the state."  Truitt summarized the panel at the end over which she presided as being about the "affective and physical labor of making money mobile" in a variety of ways.

Mariam Sangare of CESSMA situated her research in "Mobile Money and Financial Inclusion in Mali: What has been the Impact on Saving Practices?" by  searching for factors that have had more impact on financial inclusion than microcredit initiatives that often receive disproportionate attention from philanthropic organizations.  Sangare described her objective as assessing "the potential of mobile banking in favor of financial inclusion, with particular consideration of users’ saving practices."  She had previously worked on microfinance service quality in the same geographical area, but she now argued that the increasing access to mobile phone networks since 2006 was reshaping the inclusion paradigm.  The first mobile banking service, Orange Money by Orange Mali was established in 2010.  Mobile money services included monetary deposit, withdrawal, and transfer.  Unfortunately such services did not allow for borrowing or saving against remuneration. and users were charged for withdrawal, so there was sometimes little incentive for creative appropriation of the technology beyond limited remittance services.  Nonetheless, users saved anyway.

Sangare described her central research questions as follows: "Is mobile money meeting people’s saving needs?  Is it a strong alternative for rural people?  For which forms of savings is it used for (consumption, precautionary or investment saving)?  What are the differences between somewhat agricultural areas, and Sahelian ones dependent on remittances from migrants?"   She described how her theories about poor people’s saving were shaped by a critique of the so-called "liquidity trap" in which users supposedly did not have enough surplus left for saving.  She insisted that this stereotype about savings aversion was not supported by evidence.  To understand remaining unmet saving demands, she argued that mobile money actually was better accommodated to juggling with different informal saving means and arrangements than more rigid financial inclusion initiatives.   According to Sangare, in some cases, such saving also seemed to have more transformative impacts than microcredit did.   However, she strove not to minimize "constraints and barriers undermining the poor," including transaction costs that could involve monetary and non-monetary assets, a lack of trust in institutions, and regulatory barriers that included prudential regulation.  In addition, she was concerned about information and knowledge gaps and social constraints that involved intra-household and inter-household dynamics.  Finally, she asserted that it was important to take behavioral biases into account, which could include biases in preferences, in expectation, and in price appreciation.

In closing, she posed an important hypothesis that "the potential of mobile money in saving access depends on the service features and the other existing formal and informal means of saving."   Her field research included Orange Money users’ surveys in three different areas in Mali: Bamako (urban area), Kayes (sahelian and emigration region), and Sikasso (agricultural region).  In November 2014 researchers held a meeting with partners (including mobile operators and research partners) and addressed the recruitment of assistants, the testing of the questionnaire, and sampling method choice.  Preliminary results indicated a growing number of mobile money account holders since 2012 from 800.000 (2012) to 2 million (2014).  She noted that there were often regular small deposits in mobile money accounts and that users described usage motivated by accessibility, low transaction costs, and ease of use.  Responses to the questionnaire could also be put in the context of clients’ financial profiles, and mobile money usage and interactions with other financial services were evaluated in a larger fiscal economy in which mobile money could be used for saving purposes.

Sangare plans a second field visit scheduled for February 2015 that will include customer surveys and data collection in the three concerned areas. The survey will be designed to understand the involvement of different constraints in the users’ choice of mobile money service for saving reasons. From this field work she hopes to understand the poor’ saving demand and strategies, how much they accept to pay for saving commitment, and the facts on the future of mobile money services.

Although their initial abstract focused on one question -- "Does Financial Inclusion Spur Overseas Filipinos to Invest?" --  Jeremiah M. Opiniano of the Institute for Migration and Development Issues (IMDI) and Alvin P. Ang of Ateneo de Manila University retitled their talk to emphasize "Overseas migration, hometown investment and financial inclusion: A Remittance Investment Climate Analysis of a rural hometown" after being thwarted by a frustrating five-month delay involving ethics institutional approvals.

Opiniano opened with an explanation of the background of RICART, as a Global Development Network prize-winning mixed methods tool, which was developed as a way to interpret the influence of the 240 billion dollars in remittances generated by over 10 million Filipino citizens working abroad or at sea.   Unfortunately researchers feared that the supposed "diasporic dividend" represented by 10% of the nation's GDP might do little to promote substantive investment at home, particularly for the two-thirds of migrants leaving in rural areas that lose educated and industrious members of society.  He explained that the RICART acronym stood for Remittance Investment Climate Analysis in Rural Hometowns intended to determine the conduciveness of the rural hometowns of overseas migrants (found in origin countries) for investment.  Opiniano described how the "hometown empathy" of migrant Filipinos seemed to produce less tangible development and financial inclusion, despite the intense affective investment involved and how "when you send money there is love attached to it," because remittances are a type of financing "rooted in people and institutions that have links with origin communities."  In their framework, it is important also to progress from local development to global competitiveness in stages in which intermediate phases of regional economic development and competitiveness and national economic development and competitiveness are supported with infrastructure, economic dynamism, and government efficiency.

By focusing on investment needs for development and poverty alleviation in the rural hometowns, researchers hoped to "bridge the disconnection" between remittances and investment.  Starting with some raw qualitative data from ongoing rapid rural appraisal work (based on six key informant interviews and two focus group discussions), Opiniano and Ang ventured to do some hypothesizing using the descriptive results of previous rounds of RICART (Round 1: Magarao, Camarines Sur and Maribojoc, Bohol; Round. 2: Pandi, Bulacan) to prefigure what to expect in RICART Round 3, which had been stalled by ethics approval issues.

Opiniano introduced the audience to Guiguinto and described it as a place that was "improving" in terms of income and could also be described as a relatively "investment-friendly" municipality aspiring to become a full-fledged city, according to local officials.  It also was known for a variety of cooperative ventures at a range of scales.  The Guiguinto economy is fueled by non-agricultural sectors, because there are factories and produce warehouses being transported from the north to Manila.  Because of its proximity to Manilla, there had been a real property "boom" and a mushrooming of subdivisions. Guiguinto had the distinction of being the first municipality in Bulacan province to computerize real property tax information and business permits and licensing.  Nearly five percent of the total population are migrants.  To get a sense of the place, you can watch footage shot at the town fiesta, Halamanan, a garden festival with floats and parading dancers, here.

As Opiniano explained, there is some measure of fear of putting money in a bank, as a result of the trauma of the closures of banks, especially rural banks.  Additionally informants reported the "usual complaint" that "asking for loans leads to many requirements."  Gender dynamics also might be important, because there might be more trust in having female family members handle remittances responsibly. Money management was often tied to awareness of needs for school expenses and emergency.

Ang described the informant pool, which was relatively well educated, as was common in a country in which most had a high school education as a minimum, although they often lacked financial literacy formally and were resistant to advice.  Although they had high self-assessments of their financial literacy, their knowledge of interest rates, inflation, and loans indicated noticeable deficiencies.  They were also more informed about borrowing rather than saving, probably because of the nature of their own practical experience,  For a good overview of learning theory, see this summary of influential learning theories compiled by UNESCO.

"Juggling Currencies in Trans-Border Contexts: Mexico/US" by Magdalena Villarreal and Joshua Greene of CIESAS and Lya Niño of the Universidad Autonoma de Baja California also dealt with the emotional investments of migrant laborers.  (Villarreal's IMTFI work has been covered before in this blog here.)

Villarreal opened by noting that there were "many kinds of currency," including social currencies, symbolic currencies, and different kinds of resources, with another IMTFI conference plug for Zelizer's The Social Meaning of Money.  In looking at how Mexican families manage two locations, she argued that it was important to understand how "certain kinds of limits are placed" and how borders may be more than just geographical constructs.   Although she acknowledged that there may be very complex forms of multiple citizenship in an increasingly globalized world, in which people may belong to as many as four countries, she focused on either double nationalities or undocumented Mexicans.  Her research team focused on two populations: bi-national commuters at the US- Mexico border (Mexicali- Calexico) and bi-national workers from the remote village of Sabinilla in western Mexico coping with complex transnational contexts involving work in Hawaii.   She used these case studies to illuminate the "signification and valuation of currencies" and to argue that "in the intertwining of economies, cultures, normativities and practices we tend to conceive as different and dissagregated."

To introduce the theme of the volume of the cross-border flow, Villarreal showed footage of turnstiles in which immigrants were constantly moving through.  As they moved through the turnstiles, she argued that more than many resources were in circulation, including Family, Workers, Wages, Debts, Taxes, Savings, Investments, Insurance, Social benefits, and Social Security Numbers.  (Even tax returns can be a currency in Mexico, as she observed.) Those who cross must make many calculations, including measurement of risk, perceived potential of particular resources, prediction of costs, social differentiation, and value considerations, which may even result from the "renting" of social security numbers. Calculating in dollars and calculating in pesos might also indicate important cultural differentiations. Such people are faced with need to juggle currencies: both with two national monetary languages and the social and cultural values attributed to different coinages within distinct spaces of interaction. Villarreal explained that her research team was concerned with how to inquire into multiple meanings, expectations and normative frameworks associated with forms of money and economic resources, into family arrangements and the capitalization of resources, into translation of values from one currency to another, into the need to accommodate to particular procedures and practices at the interstices, into the need to calculate and transact in monetary, but also social and symbolic currencies, and also into social and cultural experiences, expectations, and desires.

Niño then took the microphone to introduce the case of Calexico-Mexicali transnational men and women who work in the US and live in Mexico and manage identities as commuters, as well as those who live in the US and have livelihoods in Mexico. Such informants may work in rural and urban areas. In Mexicali, 44% of those in the US work in agriculture, and 32% work in services, including domestic workers, those in care-related jobs, and those engaged in various forms of commerce (formal and informal). Many of these informants were hard-hit by the U.S. financial crisis, because many had their money in US banks or were involved in sub-prime mortgages or credit card debts or department store debts that were impacted by financial instability. Ironically, many sold properties in Mexico to pay US mortgages, while others borrowed from Mexican friends or family, and still others returned to Mexico after having lost their homes. Yet most of them maintain links to the US, to carry out business, to look after children, etc.  In closing, Niño showed "dollar boys" (pictured above) who approach cars to trade currencies at the border and other practices documented by researchers.

The final presenter, Joshua Greene, introduced Sabinilla, population 81, a very rural village connected to the outside world by twenty miles of dirt road and separated from the next village by two rivers.  Those living in Sabinilla used to manage herds of cattle for neighboring ranchers and farmers, but now almost everyone migrates to Hawaii, because a half century ago the owner of a California Denny's where some Sabinillans worked decided to open a branch in Hawaii and suggested relocation.  With a questionnaire of about 120 questions, the team was interested in what workers brought back other than money, including tools, experiences in the tourism economy, and expertise in world cuisines, including that gained as Thai chefs and Italian chefs in the Pacific.  Those who still make cheese in the village from cows are dislocated.  The village has also immersed itself in a green economy, and eco tourists come to see their soil retention projects, greenhouses, filtration efforts, solar water heaters, and alternative livestock and crops.  Although residents may try to start small businesses with money earned abroad, often these efforts are frustrated.  Even the most entrepreneurial workers struggle as they are working with debt, managing multiple frameworks of calculation, participating in networks, capitalizing in parallel economies, and managing the anticipation of potential value and mobilization of resources.  They must operate networks in which information and double standards matter, and they must exploit ambiguities and respond to opportunities.  In mobilizing resources, they might not have monetary resources.  Researchers found that those newer to migration often had more difficult financial inclusion experiences than those more experienced with migration histories.  Of course, this investment is a serious one, because this six thousand dollar journey can take a year to pay off.

The question-and-answer session addressed how the juggling framework might be especially relevant for women already juggling domestic labor and answered queries about choosing the family as a unit of analysis.

Hurry Up and Wait: “G2P or G&P”: Governments, Payments, and Publics

In this panel about how state policies shape financial inclusion, IMTFI alumni participant Jing Gusto of Mercy Corps suggested that coordination with government agencies required a "Gangnam Style" spirit and an understanding that it was "more fun to not dance alone."  He argued that the innovations of government could serve as a significant vehicle for financial inclusion, although many researchers on the panel complained that it was difficult to make much progress on understanding the synergies between government and the private sector when policies and practices were being changed by new administrations struggling to keep up.

"The Physical and Electronic Payment Interface and its Influence on Consumer Payment Choices and Informal/Fraudulent Practices: A Case Study of the National Water and Sewerage Corporation (NWSC) Uganda" by Tugume Howard of Benda Associates Ltd also reflected the work of Nanteza Justine and Kobusinge Justine, although the Justines were unable to attend the conference.  By focusing on the physical and electronic payment interface and its influence on consumer, Howard argued that a case study involving a national water and sewage could provide understanding of the influence of consumer choices, payment choices, and informal practices.  Howard argued that Benda Associates benefited from its knowledge of business start-ups and agribusiness as an agency capable of comprehensive research.  He began by noting that the Bank of Uganda had an ambitious Financial Inclusion Project and that the BOU's recent financial inclusion report indicated that there had been significant growth of bank branches and ATMs, although the distribution of banks and ATMs failed to serve large sectors of the population, because 41 percent of districts in Uganda lack access to any bank branch.  He also described dramatic growth in mobile money technology with 17 million people have registered.  Additionally, the distribution of mobile money agents in Uganda was more likely to follow the distribution of population than offices of the traditional financial sector.  For those who want to learn more about the financial landscape of Uganda, you can check out the maps and information graphics produced by the Finclusion Lab.



The National Water and Sewer Corporation already offered a range of payment options including mobile money, direct debit, and  ePayment, and researchers were interested in seeing if these options might ameliorate systemic problems of corruption and reduce fraudulent informal practices.  They explained that they wanted to examine the factors that drive people’s payment choices and examine the impact that the interface between physical and material might have as well.  Researchers chose to focus on a diverse set of survey areas, comprising four districts – Kampala (the capital city), Mukono (urban), Mpigi (semi-urban), and Luweero (rural).  The methodology included user interviews, expert interviews and document review.  They discovered that users reported relatively good knowledge of payment methods: 89% were aware of mobile money, 37.06% were aware of bank transfers, 85% knew about cash deposits, and  58% knew about cash.  Because the NWSC stopped accepting cash payments in its offices, users had incentives to learn about alternative methods.  Now 40% used mobile money, 23% persisted in using cash, 79% used the cash deposit method, and 8% tried bank transfers.  Although the work of the last six moths indicated that electronic payments could reduce corruption, users were also exposed to modern malpractices, such as hacking now that water bills could be paid thanks to mobile money and access to ATMs.  The Ugandan researchers also noted a number of limitations to a study largely done in urban centers that depended on a consumable (water) that presupposed development and the fact that informal practices were not yet documented, as were aspects of behavior related to gender.  Although they described it as "too early to draw conclusions," they sketched out the rest of their research plan including data entry and analysis and dissemination of results.

The IMTFI has funded a number of researchers to study practices in Mexico around digital money, and cross-border collaborations have been a particularly important aspect of the institute's scholarly work.  "Delivering Conditional Cash Transfers via Savings Accounts: Default and Mental Accounting Mechanisms" by Carlos Chiapa and Silva Prina also focused on a specific area -- conditional cash transfers that reward poor families for school attendance, preventative health visits to clinics, or participation in nutritional and other forms of education --  that IMTFI field researchers have done work on in other countries, including Gusto's own work in the Philippines (described in blogging from previous IMTFI conferences here) and work on CCTs in Brazil (as detailed here.)

Prina noted that their study was situated in the context of a large body of existing scholarship that showed that inclusion into the financial system helps the poor escape poverty (Aghion and Bolton 1997; Banerjee and Newman 1993; Banerjee 2004).  Those new to this work might start with the work of MIT Professor Abhijit Banerjee and the university's Poverty Action Lab.  Unfortunately, the poor are usually excluded from the financial system, and thus they end up using imperfect substitutes (Collins et al. 2009; Rutherford 2000).  Fortunately, it seems possible to find alternatives to this Catch 22, because there is untapped demand for formal savings devices and access to and use of a savings account increases savings and investment and promotes the welfare of small entrepreneurs and households (Dupas and Robinson 2013; Prina 2014).

The research team focused on Oportunidades, which is now rebranded Prospera, a series of social protection programs that include depositing transfers of cash to accounts of participants in BANSEFI, the social bank of Mexico.  Although most of poorest Mexican households have been granted access to the formal financial system, researchers argued that having an account (being banked) is a necessary but not sufficient condition for financial inclusion, which is defined not only by access to formal financial services, but also by use of those financial services, appropriate regulation, and financial education.

In understanding the "supply vs. demand" problem of the CCT program in Mexico, researchers found that users made little use of their accounts and that most withdrew their funds at once.  Grim results from a 2009 pilot changed little in a 2012 study that showed that 81% still withdraw at once.  Now that researchers have begun a more granular study in May 2014, they have discovered that 58% of beneficiaries do actually save: 38% save in the formal formal (although only 30% of this group does so with BANSEFI) and 79% save in informal institutions.  To understand problems on the demand side, researchers surveyed users and found out that 42% felt that they did not have enough income to save, and 43% had been told to withdraw all at once, which pointed to a "hint of misinformation and disinformation."  Indeed, 11% feared being kicked out of program if they saved, and 11% worried that the government would keep their money if they tried to keep some in reserve.   Only 51% of recipients knew they could save in their BANSEFI accounts, and basics of procedures seemed mysterious to participants, since 83% didn't know how to make a deposit, and 88% didn’t know the money was protected by federal government, although 62% did consider that keeping money in a formal back account did have advantages.

To tackle the problem of low financial literacy, they began with assessment.  They discovered that a simple question about calculating 10% of 1,250 pesos – roughly the amount of a typical conditional cash transfer – could only be answered by 31% of participants.  43% could answer questions about interest correctly, and most knew about inflation.  Drawing on a literature that showed that mental accounting could affect savings and financial accounting decisions (Feldman 2010; Sahm, Shapiro, and Slemrod 2010; Thaler 1990, 1999) and that defaults have also been shown to be very effective in increasing savings in developed countries with low-income population (Thaler and Bernatzi 2004; Madrian and Shea 2001), the researchers looking at CCT programs in Mexico wanted to design a study that emphasized these features. Unfortunately automatic savings programs are often not available in poor households in developing countries, although the concept of an account denominated for emergencies was something salient to people.  Researchers argued that it should be more salient, and that such accounts could be facilitated by a default feature, so that participants don’t have to remember to save.  Speaking on a personal note, I know that the automatic deductions from my paycheck for my retirement have certainly spurred my own default savings behavior, so this assertion certainly seems logical.

Researchers designed a randomized controlled trial in which those in Control 0 all receive a special educational workshop on how to use their accounts and booklets to track savings, those in Treatment 1 are also given an account for emergencies with sticker, and those in Treatment 2 have an automatic designation in which 10% of their income is deposited into emergency savings.  With three treatments it becomes possible to separate out the effects of mental accounting from those of a system default.  Unfortunately researchers described delays caused by political changes in Mexico, particularly now that the entire CCT system was being redesigned.  Although they said that "we know very little," they were confident that "replication should not be particularly difficult."  In the question-and-answer session afterwards participants proposed using better graphic design to promote financial literacy and considering the gender dynamics of banking behavior uncovered by IMTFI researchers working in Chiapas.  One participant also argued that it may be wrong to assume that "people are misinformed," given that banks may have incentives to push customers toward investments in risky ventures and that even a middle-class Mexican research center pension might be tied to speculation with Goldman Sachs.

'The New Financial Architecture in Ecuador: Public Regulatory and Sociopolitical Contexts for Payment Systems" by Javier Felix of Renafipse and Monica Pozo of SENPLADES began by providing the context before the financial crisis of Ecuador in 1999, which resulted in the dollarization of Ecuadorian Economy and a big currency devaluation with very high levels of inflation.  The economy had already been dollarized informally, so the government's pragmatic policy was intended only to acknowledge the existing reality.  Soon it payed off and the economy stabilized, so that the country moved from 95% inflation to rates at a more manageable 3 to 4%.  This period was also marked by extreme political instability in an era in which there were eight presidents in a short period of time.  The government has since embraced policies based on a new constitution oriented around the well-being of citizens, harmony between humans and nature, and new economic systems of a "popular and solidarity economy" that was a response to neoliberalism and deregulation, typical of what Felix described as "21st century socialism in Latin America."

By placing a priority on public policies that addressed the fact that 70.5% of Ecuadorians didn't have a bank account, the government decided to analyze new forms of payment, particularly in response to huge movement in the mobile payments sector in a country with 17.9 million mobile phone subscribers.  Policy makers envisioned a "Public Electronic Monetary System in which the electronic money system, as defined by the Central Bank of Ecuador, is a "set of operations, mechanisms, procedures, and regulations that facilitate the flow, storage, and real-time transfer of monetary value between the different economic agents."  To further this vision, the use of electronic means would include "mobile devices," "Internet," "Smart cards," and other digital monetary instruments.  Although the Central Bank of Ecuador would serve as the Distributor and Administrator, there were other regulatory institutions and technological channels to consider.  For example, there were three mobile companies in Ecuador, and the central bank has signed agreements with all of them.

Like other IMTFI researchers, Felix described flux in the process, including a "pilot phase ending tomorrow," which examined macro agents, transactional centers, users, and delays and changes.  By imagining a financial structure of inclusion that was not based on any private institution, mobile money could become a legal tender and a state liability, as a currency that all must accept.  In this particular theory of money, money should be a public good.  The Ecuadorian team warned that private companies might want to influence users and exploit market share.  Because electronic money in circulation must be backed one hundred percent with the liquid assets of the BCE, there were established limits on the system.  For example, users were limited to three accounts and $2000 per month.  Nonetheless the researchers were eager to acknowledge different perspectives on the strategy of monetary policy to speed up the recirculation of money, especially in rural areas, and they even granted that speculative markets might be necessary.  Although nationalization is often seen as a bane to private industry, the researchers asserted that mobile companies saw a new line of business and technological adaptation and that macro agents saw business opportunities and cost reduction for collections.  In closing, the presentation raised the question of how it could have a greater impact than a private system, particularly in the wake of "trauma about owning national currency."  For these researchers, money serves "as a social agreement" that "needs people’s trust and approval to be part of their lives."   Therefore, "rules should be constructed transparently and with democratic accountability."