Tools for Financial Literacy @ UCI

by Nandita Badami, doctoral candidate in Anthropology at UC Irvine

What do a fairy princess ball, a personal finance survey generator, and an online arcade game have in common? They are all tools that can be used to improve communication, learnings, and engagement with financial literacy.

This was only one of the many takeaways from the Tools for Financial Literacy, Empowerment and Justice convening held on June 28 at UCI’s Student Center. Hosted by the Institute for Money, Technology, and Financial Inclusion (IMTFI) and sponsored by Wells Fargo, the convening was a day of interactive workshops and talks that brought together practitioners from Orange County and LA County community organizations with experts in the fields of financial literacy research and pedagogy.

The day opened with welcoming remarks from Keith Kobata, Wells Fargo region bank president for Orange County, and Professor Bill Maurer, IMTFI Director and Dean of the School of Social Sciences at UCI. Prof. Maurer discussed the importance of acknowledging that many in the room had several years of engagement in the field of financial literacy (as directors or implementers of their institution’s programs), but relatively few had received formal financial literacy training in the course of their own education. Financial literacy is only just getting recognized in school and college curricula, and is a long way from being mainstreamed. The purpose of the convening, Maurer reiterated, was to “connect as a community, refresh perspectives, and to share resources towards a common goal.”

Organizations in attendance. Photo credit: Katie Sauer, Twitter

Resource sharing guided activities for the rest of the day: three invited expert organizations – Brain Arts Productions, the National Endowment for Financial Education (NEFE), and Next Gen Personal Finance (NGPF) – shared very different methods and approaches to engage learning.

Brain Arts Productions specializes in building financial literacy through the creative arts. Gwen Tulin and Liz Lark-Riley began the day with an interactive activity that got all the participants on their feet, working through difference between barter and trade through a card game, and demonstrating a teaching technique called Learning by Doing. Each participant received a packet of four to six cards, and a number (taped to a scroll on the bottom of their chairs!). The objective of the game was to get four cards that matched the number on their scroll, but participants could only do so by a 1-to-1 barter system: they could only trade one card at a time with someone else. Participants had only 10 minutes replace all the cards they were dealt with to match their personal number. After they did, they yelled “Match!” The game then abruptly changed: the organizers told us we had all won the lottery, and everyone received new wildcards that could be traded for anything. In this new form of the game, trading became easier, and many more people were able to yell “Match!”

After the activity, Gwen and Liz led the group through a reflection exercise. The point of the game was to demonstrate the difference between barter and trade using money—in this case, the wildcard that could be traded for any other card—but also to have the group converse with one another so that they could come to the realization that the privileges in the game were unfairly distributed. Some people had more cards to begin with (6, not 4), and this made it easier for them to win the game. The takeaway was as much about the difference between barter and trade as it was about the politics of resource distribution.

Bartering activity led by Brain Arts Productions.

Following the first workshop, senior director Dr. Katie Sauer of the National Endowment of Financial Education (NEFE), gave participants an overview of the current state of the personal finance ecosystem. Dr. Sauer showed how various elements – small dose lesson plans (not part of a broader curriculum), articles and reference resources, calculators, tips and tricks, expert advice, coaching, fintech innovations – interact to make a financial literacy ecosystem. Speaking about the need to understand how the various elements interact in order to “rightsize” expectations from individual interventions, Dr. Sauer challenged the audience to go beyond thinking in terms of individual interventions, and consider instead how to deploy several elements of the ecosystem together. She then finished off her research presentation by sharing NEFE’s Financial Education Evaluation Toolkit, an online tool to create free personal finance test to evaluate current programming: https://toolkit.nefe.org/.

Dr. Sauer: "Even the highest quality, perfectly dosed and delivered influence will be mitigated by other elements with the ecosystem."

Personal Finance Ecosystem, National Endowment for Financial Education © 2019 

From an overview of the ecosystem, the participants were then transported to a specific element of it. Christian Sherrill from Next Gen Personal Finance (NGPF) took the participants through a tour of the contents of the NGPF website – a resource hub for financial literacy educators. The participants explored NGPF’s various resources – including an interactive library, a quiz games library, and a video library. They also spent time on the website’s arcades page playing NGPF’s specially designed video games that help “game out” real life situations. These situations included paying for college, managing credit, making it through the month on a tight budget, and even what it means to live life as an Uber driver! Our table went through the budgeting app SPENT. We were each given a scenario, playing as an unemployed American (of the 14 million that currently exist), with meagre savings of $1000. How were we going to make it through the month? Some of us made it, some of us didn’t—but playing through real-life situations allowed us to appreciate the stakes involved in good budgeting (try it here: http://playspent.org/html/).

Learning by playing, NGPF's Christian Sherrill. Check out their free online personal finance arcade games here: https://www.ngpf.org/arcade/.

Brain Arts’s second activity demonstrated a tool called Process Drama where volunteers were invited to attend and buy provisions for a fairy princess ball. The group needed to travel to the Goblin Market and make decisions about what and how much to buy together. In doing so, the group was able to arrive at ways to negotiate personal values and spending as a group. Although an obviously unrealistic scenario, as is point of process drama—role-playing builds worlds through which to explore financial situations in low stakes contexts. Alternate worlds allow individuals to who tend to be more conservative or worried about taking risks in real life to explore multiple possibilities in a risk-free environment. Topics covered through process drama can include the following: negotiating for a raise, buying a house for the first time, applying for student loans, learning how to invest, and opening a bank account. After the activity, participants brainstormed contexts in which elements of their existing programs could be conveyed through process drama activity.

At Goblin Market: Process Drama activity with Brain Arts Productions to learn and reflect upon unconventional pedagogical techniques for financial education.

Brainstorming ways to use process drama for existing programs.

In addition to these workshops, Linda Nguyen, Vice President of Corporate Philanthropy and Community Relations at Wells Fargo, led a roundtable discussion with community practitioners: Claudia Flores from Human Options, Mary Anne Foo of OCAPICA, Yanet Gonzalez from Templo Calvario CDC, and Steven Kim from Project Kinship. Together, they discussed the importance of financial education, its role in transitioning from survival to sustainability, and solving the problem of generational poverty. They also discussed the various challenges facing the financial literacy training community such as:

• how to integrate financial literacy into existing programs (for instance, parenting—how do you model financial literacy for kids?)
• how to assess the level of financial literacy of individuals to point them in the direction of appropriate programs (a finlit course, or more extensive knowledge and behavioral changes?)
• the challenge of integrating financial health and mental health, and serving critical populations like refugees or victims of domestic violence.

Related to the latter point was the importance of recognizing financial abuse as a kind of domestic abuse to begin with. Questions and answers after the roundtable touched upon an additional challenge: how to measure success. As one participant put it, perhaps there is no “magic ruler” to measure success; success in this field looks different depending on where you start out.

Roundtable of community practioners.

Steven Kim of Project Kinship unfurling a list of the 48,000 barriers to employment if you have a felony conviction.

Participants took away ideas they wanted to develop further and eventually implement in pilot programs or additions to their existing activities. It was great opportunity to take time out of the day-to-day grind, take a step back, and imagine new ways of connecting and learning. As Monica Sauceda, who teaches financial literacy and entrepreneurship to high school youth at Templo Calvario CDC put it, “This event was very important to me as I have looked up some of the resources provided at the event on my own but as a small non-profit we do not have a team of trained individuals to do extensive research nor are experts in teaching. We rely on events like these to be informed and network with like-minded people to bounce ideas off of to be able to better serve our community.”

Towards the very end of the day, Prof. Maurer announced avenues for further engagement, including opportunities for expertise sharing between the UCI team and the various participants. The day ended with a networking reception, and promises for next steps at a national scale!

To access additional open access online educational and research resources visit: https://sites.google.com/uci.edu/toolsforfinlit.


Photo credits: AntMedia UCI Student Center Event Services.

Fintech apps: Shaping the future of financial literacy?

UC Irvine researchers conduct study with five popular fintech apps to determine how Americans interact with financial advising apps

UCI students share their experiences with fintech apps in focus group.
Photo credit: Jenny Fan

We all know we should be saving for the future. But what does that mean? Should we be contributing to a retirement plan? And if so, what type of retirement plan?  Or should we just be putting money into a savings account? And how much should we be saving each month? What if there is nothing to save?

As Kristin Wong, personal finance journalist, wrote in the New York Times, “Many of us grow up learning that money is one of a few topics — like politics, sex and religion — that you should avoid in polite company. You don’t brag about your net worth. You don’t share your salary with colleagues. You try not to ask your friends about their rent, even if it helps put your budget in perspective.”

April is Financial Literacy Month, and it so happens researchers in the School of Social Sciences have been asking whether new smartphone apps are actually teaching people about better financial habits.

FINANCIAL ILLITERACY IN AMERICA

Without a trusted resource to learn about financial literacy people often feel overwhelmed by budgeting, debt management, and trying to meet savings goals. The Federal Reserve Board's 2018 Report on the Economic Well-Being of U.S. Households found that 40 percent of Americans say they cannot cover a $400 emergency expense, or would do so by borrowing or selling something.

Those who are interested in managing their personal finances often turn to apps and robo-advisors from financial technology companies, commonly called fintechs. Popular apps, such as Mint, claim to help users learn about budgeting and establishing personal financial goals. Since 2008 the number of new fintech companies in the US, and around the world, has soared.

DECIPHERING THE ROLE OF FINTECH

Building on a rich portfolio of research on how people interact with money and financial technology, the Institute for Money, Technology and Financial Inclusion (IMTFI) and the Filene Center of Excellence in Emerging Technology at UC Irvine conducted a study to dig deeper into fintech apps, the experiences they offer, and how users respond to them.

“With the unbundling of banks, there are a lot of fintech companies popping up and taking on roles traditionally held by banks. Many are providing personal financial advice through these new technologies, but we know very little about actual user interactions with them,” says Melissa K. Wrapp, a graduate student in the Department of Anthropology at UC Irvine. “An app on a phone to budget or invest can be tremendously helpful, but you also have to be wary of what other information or sales motives could be imbedded within apps.”

Wrapp works as a researcher for Bill Maurer, anthropology and law professor and dean of the School of Social Sciences at UC Irvine. He’s also a Filene Fellow who performs research for the Center for Emerging Technology to look far into the future to connect credit unions with the most impactful technology and drive forward-thinking business decisions.

“It’s important to understand how people use these apps because we just don’t know if they encourage better financial behavior or lead people down the wrong path,” says Maurer. “My hypothesis going in was that these apps are almost like training wheels—and that people would graduate from them after a time and seek financial advice from more traditional sources like a bank or credit union.”

PUTTING FINTECH APPS TO THE TEST

In a pilot study, twenty-seven participants used one of five fintech apps for 30 days and reported their experiences. Some apps were personal budgeting apps and others were for investment management. The group included UC Irvine undergraduates, graduate students, and staff. Several participants were completely new to financial management apps, while others had some previous experience with fintech apps.

"We started the project with preliminary interviews, then held a focus group half way through the study to see how the experience of using the app was going," Wrapp says. "During the exit interviews, many participants mentioned that the focus group conversations were as valuable to them as using the app itself because, for many, it was the first conversation they've ever had with people about how to manage their personal finances."

While many participants indicated that they are now actively seeking out more personal financial education, Maurer and Wrapp will be presenting the complete research results at the Center for Emerging Technology and Filene's Spring i3 "The Future of Trust: How Technology Will Make it or Break it for your Credit Union" meeting in Seattle, WA on May 29-30. Their discussion will examine behavior and patterns of younger consumers’ use of financial apps to manage their money, and how credit unions can identify best practices to shape their own mobile apps.

-Megan Boettcher for UCI School of Social Sciences

See original post at: https://socs.ci/financialliteracy2019

Financial Education Via Television Comedy in Applied Economics Letters

NEW article by Andrew Crawford, Paul Lajbcygier and Pushkar Maitra in Applied Economics Letters, 19 Jan 2018 for their IMTFI-funded project, Mobile Money Financial Literacy via Television Comedy.

ABSTRACT

We show that television may be able to deliver rudimentary financial literacy in a cost-effective manner. In a controlled experiment, Cambodian garment factory workers were randomly assigned to one of three treatments: no video (baseline), slideshow and comedy TV show. After the intervention, to examine whether individuals were able to internalize the information that was provided, participants were asked to answer a set of questions on financial knowledge and attitudes. Our results show that participants randomly assigned to the comedy show are significantly more likely to report that they are interested in obtaining more information on savings accounts and are also significantly more likely to open a savings account in the next 6 months. This method of delivery may prove effective particularly for the disadvantaged sections of the population in remote regions of Cambodia.

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Introduction
In recent years, mass media has penetrated large parts of the developing world with traditionally remote communities now having access to television and internet. It is argued that this could be used to achieve development goals: entertainment can have an educational role to play, leading to the term edutainment. Evidence from different parts of the world suggests that this is indeed the case.

In this article, we examine whether mass media can be used effectively to improve financial literacy and consequently foster financial inclusion in developing countries. Television may be able to deliver rudimentary financial literacy to those most disadvantaged in a cost-effective manner. The promise of broadcast TV is that the financial education it delivers may prove effective as it will be accessible, memorable, and entertaining to a large audience of those normally excluded from financial services, particularly those belonging to disadvantaged sections of the population and those living outside the major cities.

The Cambodian Microfinance Association (CMA), in conjunction with the research team, produced a 5-min comedy skit to be ultimately shown as prerecorded segment in a popular Saturday evening television show, one which is watched by 20% of the country’s population. The episode involves a storyline mainly focussed on concepts relating to financial knowledge, loan management and savings. An advanced video of the episode was shown to randomly selected garment factory workers during their lunch break. A second randomly selected group of garment factory workers were shown a financial literacy slideshow video, which covered roughly the same material, but did not have any comedy content. After watching the respective videos, the participants were asked to participate in a survey to collect information on their financial knowledge and attitudes towards different financial products. The results were compared to that of a baseline group, which consisted of a third randomly selected group of garment factory workers who did not watch any video, but participated in the same survey as participants in the two treatment groups.

We find evidence that attitudes to savings accounts were significantly different for those who viewed the comedy show compared to those assigned to the control and the slide show, without going into explanations for these differences. Furthermore, it appears that the video was more effective than the alternative delivery approaches in piquing workers’ interests in savings accounts.

To access full article - http://www.tandfonline.com/doi/full/10.1080/13504851.2017.1422595?scroll=top&needAccess=true

Photo taken from Cambodia Microfinance Association (CMA)'s video on loan management from YouTube. View here: https://www.youtube.com/watch?v=k_SJAQw9DsA

Contact information:
Andrew Crawford, Department of Banking and Finance, Monash University, Caulfield Campus, Australia - crawfs@gmail.com
Paul Lajbcygier Department of Econometrics and Business Statistics, Monash University, Clayton Campus, Australia
Pushkar Maitra Department of Economics, Monash University, Clayton Campus, Australia - pushkar.maitra@monash.edu

Is the Rural Hometown a Worthwhile Investment?

by ALVIN P. ANG and JEREMAIAH M. OPINIANO

This post is the second in a 2-part blog post series. For part one, see here.

The rural hometown is where all human mobility begins. In the case of developing countries, poverty, fewer job opportunities, and limited business activity hound rural development. It is thus not surprising that migration — be it to the cities, to the more gainful towns, or to overseas countries — pulls people to go elsewhere. Place becomes a livelihood and unfortunately rural birthplaces become less attractive, even to their own residents. But since not all can move, kith and kin stay at home, in their rural hometowns. The person moving, for his or her part, forges an economic relationship with their families through domestic and international remittances. 

Compared to non-migrant households, these kinds of households can be financially fortunate. These remittances can even contribute to local economic activity by enticing demand for more goods and services. Moneyed households, especially those with surplus incomes, can start businesses — or even invest in local property, in the products of local financial institutions, and other opportunities available locally. So remittances come to be an economic lifeline for rural areas. Remittances become a type of financing rooted in people and institutions that have links with origin communities of the migrants. Given that remittance incomes flow into rural areas, a crucial question that emerges is related to how rural communities could maximize the benefit of these remittances? For this, it is necessary to identify the local conditions that can stimulate the fruitful use of remittances. It may also be important to assess if moneyed income-earners like overseas migrants are financially capable of investing.

This is the case for the Philippines, a major origin country of overseas migrants who are scattered worldwide. Here, a group of researchers has been implementing a project that goes by the acronym RICART: Remittance Investment Climate Analysis in Rural Hometowns. Ricart sought to find out if overseas migrants and their families find wisdom in parking their money in the place —the rural hometown — they are familiar with. Even the way the rural hometown is governed, as well as the place’s socio-economic and investment-related conditions, was examined. Four municipalities have been studied over the last four years. The latest one is in Guiguinto in Bulacan, an hour’s ride away from Manila and a hub for manufacturers. Guiguinto is a progressive local community, economically.

Guiguinto is first-class in terms of income, and in securing business permits is perhaps the quickest in Bulacan. Registered businesses in Guiguinto are some P9.343 billion big in terms of resources. Local productivity, estimated at P1.235 million per worker, is high in Guiguinto. This is not to mention that Guiguinto has an estimated 3,959 overseas Filipinos sending incomes to loved ones back there, supplementing local incomes. Guiguinto’s economic lure has been a catch basin for 44 branches of financial institutions found in the community along with shopping centers. These institutions are accessible to local residents. 

So do overseas Guiguinteños find their community worthy to invest in? Ricart’s survey there (n=229 respondents who are overseas migrants and migrant and non-migrant households) found that only 30 percent of overseas remitters and 43 percent of overseas migrant families invest in Guiguinto. About 33 percent of remitters and 40 percent of migrant families have businesses in Guiguinto. And 44 percent of remitters and 26 percent of migrant households hold savings accounts.

These results can be surprising to observers. Why are many of these moneyed people not investing? One reason could be attributed to limited levels of financial literacy. The same Ricart survey for Guiguinto found that the three respondent-groups claim they do not need assistance in handling money, and have “good” levels of knowledge and skills on handling money. But when asked about three basic concepts surrounding finance — interest, inflation and loans — less than eighty percent of respondents gave correct answers to the survey’s questions. However, this does not mean respondents’ reasons for not investing in their rural hometown are suspect. Migrant households’ heads were asked in a focus group discussion what governs their decisions to invest in their own rural backyard. Their answers can be visualized like a magnifying glass, so a Magnifying Glass of Rural Investing Assessment was developed (see diagram). From the perspective of the person making the investment decision, in this case the remittance-receiving household, their assessment can be likened to holding a magnifying glass, inspecting personal, familial, environmental and institutional developments before saying yes to rural hometown investing.

The magnifying glass of rural investing assessment

(in Alvin Ang and Jeremaiah Opiniano, 2016)

The person trying to decide looks at his or her experiences as well as personal disposition toward saving and investing. The family also plays a role in the investment decision, with the household’s current financial condition being an important factor. Family members also assess present and future needs while weighing daily needs against short-to-long-term prospects. If we zoom out to the immediate geographical environment of Guiguinto. Visible economic progress is both good news and yet also a matter of concern given that moneyed people may then become prey for scammers. Peaceful and orderly local conditions may encourage the desire to invest in the hometown.

Finally, there is the assessment of the available financial institutions. While interviewees are concerned with the litany of requirements necessary to avail of a financial product, the financial institution’s stability is also a primary consideration. Previous as well as ongoing episodes of scams are reasons for such careful assessment. Some financial institutions operating in Guiguinto were also asked about overseas town mates’ financial behavior. There is concern about how incomes are predictably used for more consumption. But some overseas Guiguinteños save and even avail of housing loans. Some migrant town mates are also concerned about the accessibility of the financial institution, signaling the need to receive the overseas remittance quickly.

This Magnifying Glass of Rural Investing Assessment may reveal differing perspectives and attitudes on the part of prospective rural hometown investors like overseas migrants. There may be those who are attuned to risk-taking or those who are risk-averse. Despite the variations, financial literacy initiatives are an important development agenda, more so for the rural community. If a rural economy that is progressing wants to sustain the gains of such growth and benefit more from overseas remittances, capacity building through local financial literacy programs may well be the perfect complement.

For rural localities like Guiguinto, overseas and even domestic remittances signal the need to address a policy gap: how can these remittances be maximized for local development? Localities also have their own contexts to consider when remittances are to be channelled to productive purposes (in the case of Guiguinto, there’s industrialization and a declining role for agriculture, although gardening is a culturally-rooted entrepreneurial venture that still clicks locally). For its part, the local government has instituted many reforms over the past decade to make Guiguinto’s business climate friendly to investors and entrepreneurs.

Lessons from this migration-and-development story of Guiguinto have informed a Philippine local competitiveness agendum. Regardless of who sits in power nationally and locally, harnessing remittances for rural development will require political will and strategic interventions so that resources like remittances naturally go to productive economic activities found locally. Improving the business climate is a necessary precondition to overseas remittances development potential. It may help that financial institutions properly inform their clients locally of the many savings, investment and entrepreneurial options available to them.

In the end, if rural residents are more financially literate and capable, and if local officials offer programs and policy-making that account for the needs of local investors, moneyed rural residents like overseas migrants could be encouraged to make their rural hometown the natural choice for investing.

***

This piece is an outcome of the research project "Overseas remittances, hometown investing and financial inclusion: A remittance investment climate (ReIC) study in a rural hometown." This project was conducted by the non-profit Institute for Migration and Development Issues (IMDI) and supported by the Institute for Money, Technology and Financial Inclusion (IMTFI) of the University of California-Irvine. Read their final report here.

Read Dr. Ang's recent commentary on financial literacy and financial inclusion in the Philippines here.

Dr. Alvin Ang is professor of Economics at the Ateneo de Manila University.

Jeremaiah Opiniano is the IMDI executive director and an assistant professor of Journalism at the University of Santo Tomas. For comments: ofw_philanthropy@yahoo.com.

Financial Education via Television Comedy: Evidence from a Pilot Study in Cambodia

Andrew Crawford, Paul Lajbcygier and Pushkar Maitra, Monash University

Spreading financial literacy and fostering financial inclusion across a heterogeneous population is crucial for sustained and inclusive economic growth and development. Our goal is to explore the potentials of broadcast television to spread basic financial literacy at low cost across entire populations especially in remote locations. Broadcast TV may be able deliver accessible, memorable, and entertaining education to those normally excluded from financial services.

Financial education skit

The Cambodia Microfinance Association (CMA), in conjunction with our research team, produced a 5-minute skit that will ultimately be a part of a highly rated weekly comedy show in the country. The show involves a storyline focusing on concepts related to financial knowledge, loan management and savings. The video was shown to a randomly selected group of garment factory workers during their lunch break in a ‘pilot study’ (the episode is yet to be broadcast on television). A second similarly selected group of garment factory workers were shown a financial literacy slideshow video covering the same material without any comedy content. The financial topics that were covered in the video and slide show included debt, savings accounts, and microfinance business loans. Figure 1. presents the percentage of time spent on each component of financial literacy. 

Figure 1: Time allocation to different aspects of financial education in the video

After watching the respective videos, the participants were asked to participate in a survey to collect information on their financial knowledge and attitudes toward the related financial products. The results were compared to that of a third (baseline) group that consisted of randomly selected garment factory workers who participated in the same survey as the two treatment groups without having watched either of the two videos. All the sessions were conducted in garment factories located in the Special Economic Zones that are within 50 km of the capital city of Phnom Penh. 

Screening of videos in garment factories

Figure 2 shows clear signs of increased attraction to savings accounts following the screening of the comedy video. Out of those who watched the comedy show, only 5% are ‘not interested’ in savings accounts afterwards compared to 21% of slideshow video viewers and 18% in the control group. Both 'very interested' and 'somewhat interested' scores were higher for individuals assigned to the comedy treatment compared to those assigned to the slideshow or the control treatments. Using multivariate regressions we found that the likelihood of reporting 'interested' or 'very interested' is almost 14 percentage points (or 17%) higher in the comedy treatment group than in the control treatment group and almost 18 percentage points (or 19.5%) higher than in the slide show treatment. We believe that the comedy story line and narrative about savings accounts made their benefits more real and relevant in comparison to the slide show.

Figure 2:  Interest to obtain information on savings and microfinance loans

While the video was effective in changing attitudes to savings accounts it was less successful in changing attitudes toward microfinance loans. Approximately 36% of comedy viewers, 38% of slideshow viewers and 32% of those in the control treatment disclosed lack of interest in microfinance loans for business. Similarly over 70% of respondents in each group said they would not apply for a loan in the next 6 months. This was corroborated using multivariate regression analysis. Furthermore, we found that individuals randomly assigned to the comedy treatment report were significantly more likely to have their own savings account in the next 6 months. However there seemed to be very little effect on the willingness to have a new microloan in the next 6 months.

Further examination of the survey data reveals the reasons for the differential effect. Both savings and loans respondents were asked why they had never used the products. With regards to savings, over 16% of all respondents said it was because they had no previous knowledge of savings accounts. On the other hand less than 3% had no previous knowledge of microloans. Over 64% replied they had never needed a microloan and only 20% of all respondents had previously taken out a microloan. This deeper examination suggests that a large number of respondents have knowledge of microloans but feel that they have no need for them. Other reasons for not borrowing included cost of interest (7%), belief that MFIs are expensive (6%), fear of repayment (5%), and lack of collateral (2%). Thus, in this context, the information delivery mechanism (i.e., entertainment or slide show) would have less impact on microfinance business loans.

Policy Implications

The survey results indicate changed attitudes to some of the topics covered. We find evidence that attitudes towards savings accounts were significantly different for those who viewed the comedy show in comparison to those who viewed the slide show as well as to those who were assigned to the control group. It is to be noted that 30% of the video was devoted to savings accounts. Recently, policy makers and governments have promoted savings accounts in the developing world for use with transfer payments (see for example the Pradhan Mantri Jan Dhan Yojna – PMJDY – program in India). However, barriers preventing uptake of savings accounts continue to exist due to lack of access (e.g. proximity of branches, onerous paperwork) and business issues (e.g., lack of profitability of savings accounts for banks). In Cambodia, most garment factory workers could see the benefit of savings accounts after watching the comedy video and were interested in pursuing more information about them. The video was also more effective in piquing workers interests in savings accounts: possibly because the comedy video delivered the financial literacy content in a manner that was entertaining, accessible, memorable.

The successful use of financial education through entertainment media has broad implications for the delivery of financial education. It demonstrates that it could be an engaging and cost effective way to financially educate a broad range of people in developing countries around the world irrespective of their location as well as literacy levels. Television comedy therefore could be leveraged as a means of financial education and future TV shows should incorporate more content on financial matters, particularly if knowledge is low across the population.

Link to Final Report: Financial Education Via Television Comedy

Comics help women become super savers in India: see the pages

Research by IMTFI fellows Deepti KC and Mudita Tiwari part 2 featured in The Guardian Visa Partner Zone 

Deepti KC and Mudita Tiwari's  comic books to help women from low-income communities to save money features eight illustrated tales document the financial problems – based on real life in Mumbai – that the female characters face, and how they resolve crises through managing and modifying behaviors.

Comic books about characters like themselves help women in India and other developing economies learn about personal finances. Photograph: IMTFI and IFMR LEAD

"From the slums of India, two comic book heroines have sprung."
Researchers found that any tool meant to educate women about the power of a safe, informal banking channel must appeal to children and women, be respectful, and show the challenges that female entrepreneurs face when managing their income without access to convenient financial services. 

A comic book and illustrated characters mirroring these women provides the perfect, immersive vehicle. So Tiwari and KC worked with worked with Creative Rats, a design and illustration company based in Baroda, India. With its creative director, Ritesh Gohil as illustrator, the comics tell stories of two relatable characters – Saraswati, a vegetable vendor, and Radha who works at a factory making thin, crisp wafers called “papad”. Both work in a big urban slum."

View pages of the comics in Part 2 of this blogpost from The Guardian please visit:

http://www.theguardian.com/visa-partner-zone/2016/feb/03/comics-women-financial-saving-banking-education-literacy

View Part 1, "See you in the funny papers: women love comics about financial literacy" 

Full report of their research can be found here. 

Innovative and Interactive Ways to Improve the Savings Habits of Women

by IMTFI Researchers Deepti KC and Mudita Tiwari 

Sarala is a micro-entrepreneur with a bank account and access to banking services within 1 kilometer of her residence Dharavi, Asia’s largest slum in Mumbai. Yet, Sarala uses higher-risk and unregulated savings options such as chit-funds - a type of group savings mechanism where payouts are made using a lottery system. With Sarala’s husband often spending household savings on gambling or addictive substances, she continually strives for strategies to hide cash in food jars, piles of clothes, and among beauty supplies. Despite having bank accounts, she does not want to save with the bank. “I am not able to save enough to go to bank and deposit”, states Sarala.

A woman showing where she hides her money in the kitchen 

Sarala was not alone in thinking so. In the First Phase of the study, we followed the lives of 25 women in Dharavi for two months to study women’s saving behavior. It is to be noted that many women were not open to admitting their hiding strategies unless we visited them multiple times and gained their trust. Hence, we used an ethnographic research approach to learn about their lives in their local context. Women taught us about their savings needs. We were convinced that they needed i) financial counseling to address the psychological barriers they face about savings, and ii) savings products that are flexible, offer liquidity and promote daily savings. 

Design of the financial education modules and a savings tool
The lessons we learned in the First Phase of the study inspired us to design financial education modules using an interactive comic book format depicting the life of the women entrepreneurs. The characters were carefully crafted using life stories from women’s lives - challenges that women micro-entrepreneurs like Sarala face and how they overcome these financial challenges. The comic books introduce concepts of disciplined savings, and how to achieve short-term and long-term savings goals. 

An image from the comic book

While we believed that our financial education modules would encourage women to maximize their savings, at the same time, we also learned from our previous study that financial education is not enough if financial consumers do not have access to flexible saving products. 1  

Lately, economists and researchers have experimented with savings tools beyond basic banking access. The first study of this type introduced a lockbox to respondents in a randomized controlled trial in Kenya. 2 The findings show that supplying a secure lockbox to store money increased savings by 66 percent. They also found a positive impact for women with “below median decision-making power in the baseline.” The product led to a higher “self-perception” among the participants of their savings behavior and positively affected consumption decisions on durable goods. 

With an eye to the innovative project conducted in Kenya, we decided to provide alternative savings tools to our respondents, along with financial education, to understand if the savings products could improve their savings capability.

Experiment to understand the impact of the financial products 
In the Second Phase of the study, we conducted an experiment in Bihar with 203 women who were associated with Self Help Groups (SHGs). We provided 40 women with financial education training; 40 women with a lockbox and a key; 43 women with a lockbox and a key as well as financial education; and 80 women received no intervention. 

A female respondent and her family and neighbors listen to the story on savings 

We followed women for more than two months and recorded their savings at the end of first and second months. Women who received the financial education training increased their savings by 8% compared to women with a 1% increase in savings who did not receive financial education. Provision of the lockbox further significantly increased savings by 42-51% during the intervention. 

Data indicates that women who received financial education training shared their knowledge with others too. 77% of women who received training reported sharing their knowledge with others; 73% reported discussing the household’s expenses, budget and savings with their husband; and 59% reported they encouraged their children to save.  

A woman receiving a lockbox and a key

Increase in SHG bi-weekly saving
Women were meeting with their SHGs on a weekly basis, and in every meeting the majority (87 percent) was depositing Rs. 10, a minimum required amount to be a member of a group. The average bi-weekly savings amount during the baseline survey was Rs. 20. 
After we provided women with the intervention, SHG bi-weekly saving increased to Rs. 22 after a month; and to Rs. 32 after two months. There was a substantial increase in savings in women in the treatment group - who received a lock box and financial education training, compared to women in the control group - who received no financial literacy and lockbox from us. For example, bi-weekly savings of women in the control group increased from Rs. 26 to Rs. 31 - a 16% increased in saving, whereas women in the treatment group increased savings from Rs. 20 to Rs. 33, a 39% increase in bi-weekly SHG savings.  

Lessons learned
Our results align with other similar academic studies, like the Kenyan study noted above. We learned that understanding the financial behavior of women is a very crucial and progressive step towards finding solutions to empower women in the marketplace. Women like Sarala need savings products that are flexible, offer liquidity and promote daily savings. Women cannot go to banks every day, especially if they are living in rural areas that are far away from these services. The weekly engagement with SHGs is a step forward but still amounts to sporadic savings. In most cases, they are saving the minimum ‘required’ amount to remain a member. 

When promoting savings, the psychological barriers women face when trying to save must be addressed. Our findings indicate that context specific financial education, and reinforcing saving behavior through easy-to-use tools such as the lockbox, encourages women to save regularly. For example, in our study, women were actively hiding money away in their homes to ensure other household members don’t squander away savings. Providing a secure lockbox helped women put away money safely. Providing relevant financial education helped women save this money in banks and SHGs rather than at home or through chit-funds. 

Findings from this study can encourage NGOs and public policy makers to find very simple tools to implement that can help women increase their savings by a significant amount. This kind of an intervention is not only low cost, but also low maintenance and is the kind of short-term solution that is adaptable to the lifestyles and habits of poor women in India.

References:
1. KC, Deepti and MuditaTiwari. 2015
“Can Financial Literacy Help Migrants Save More?” Funded by Institute for Money, Technology, and Financial Inclusion (IMTFI), University of California. Published by IFMR Lead.

2. Dupas, Pascaline, and Jonathan Robinson. 2013a. 
“Savings Constraints and Microenterprise Development: Evidence from a Field Experiment in Kenya.” American Economic Journal: Applied Economics 5 (1): 163-192.

Read Deepti KC and Mudita Tiwari's Project Report Innovative and Interactive Ways to Improve the Financial Capabilities and Savings of Women

Financial Literacy through Comic Books in Dharavi & Bihar with Deepti KC

In March of 2015 IMTFI arranged for a comprehensive visit to India to gather updates on four of their sponsored research projects, introduction can be found here. Developed with research in the Dharavi slums of Delhi, this second of four case studies takes a look at financial literacy and rural women in Bihar with Vanya Mehta and Deepti KC. 

(Left to Right: Vanya Mehta and Deepti KC)

Deepti KC of of IFMR has had a long-standing interest in the Dharavi slum in Mumbai where she has studied both site-specific cash economies (and the feasibility of introducing mobile or electronic payments) and the impact factor of financial knowledge, including knowledge derived from specially designed financial literacy comic books for male migrant workers and for female proprietors of small businesses. She has now teamed up with human rights activist and journalist Vanya Mehta to continue and refine an effective approach for disseminating financial knowledge tailored to specific populations. As Deepti has argued in a blog post, mobile money in India still lacks the brand recognition that it has in Kenya and there is a greater need for "knowledge platforms" in the country. Deepti has also worked with her fellow IMTFI fellow Mudita Tiwari to develop simple and engaging materials for raising awareness about digital money management and general financial literacy. According to Deepti, Mudita asked, "Shall we create a comic book and test if we can encourage women to save more?" and then "the rest is the history!"

In sitting down for an interview for this blog post, Deepti emphasized how much she had learned from her IMTFI mentoring and how the anthropological perspective in considering multiple points of engagement has been invaluable to her. "IMTFI has been very useful; it really taught us about the ethnographic approach, so before going in and just data collecting, we can find more than we might in a regular structured questionnaire." People can "communicate more about their lifestyles" when a research methodology is used for "mixing qualitative and quantitative," as she first did when working with IMTFI colleague Mani Nandhi. (See more about Mani's research on rickshaw pullers in another blog posting in this series). "I would not have scheduled five visits for these financial literacy tools with a more conventional survey."  

Deepti affirms that "making multiple trips to build trust" needs to be prioritized. The kind of information you get is totally different. Yes, the same budget can collect data from thousands of women, but let’s not get greedy about the numbers." She has made an effective case for getting to know subjects in deeper and more nuanced ways and has also received funding for her projects from The Ford Foundation.

According to Deepti, this mixed methods approach has been particularly important for not thinking about "access" to financial literacy tools too narrowly, particularly when barriers to financial inclusion are not constituted merely by straightforward inabilities to open accounts or push buttons on a cell phone. "At first I thought the problem was access. Now I understand that access is not the issue; the problems are cultural. It's about a lack of other kinds of information, a lack of handholding support. Funding from IMTFI allowed me to work at the interhousehold level and to notice that when we are pushing these financial products to women, we may be disturbing their position in the household and causing domestic disputes."

Deepti has focused on a fundamental question: "How should we empower women?" To do so, she argues that it is important not to ignore "how their husbands behave" and acknowledge unintended consequences of development work that could even be correlated to incidents of domestic conflict. Analyzing dynamics on the intrahousehold level can also be important for customizing requirements for financial literacy products more effectively. "I would also like to understand the role of daughters in motivating mothers to save, because the more we know about what is going on inside, the more we know about what is going on outside."

Deepti also shared a more existential reason in which IMTFI support has been transformative for her. "It has made me more compassionate. Anthropology teaches you about seeing them as people, not just data. When you are giving that respect and trying to understand why that person is trusting, you are gaining trust and opening up. When you achieve that comfort level, they will tell you where they are hiding money. But you have to be very human and respectful." But building this "personal connection" isn't always easy, because "as a researcher you are not supposed to have emotions."

Vanya explained how her research interests grew out of her interest in Dalit politics. In the interview she characterized herself as a relative newcomer: "I just joined in January to help run these projects on the ground. I had worked as a journalist and had conducted my own project with 216 households, in Hyderabad, working on public policies with scheduled castes. There are 37 or 38 different scheduled castes in Andhra Pradesh. By looking at four different scheduled caste neighborhoods, I could see community level differences that went beyond any questions about access to government benefits. It's about what kinds of jobs are they getting." (For more about scheduled castes, which are official designations given to various groups of historically disadvantaged people in India, such as the Dalit people who have been subject to discrimination as  "untouchables," see this site from the Ministry of Social Justice and Empowerment).

During elections, Vanya worked for the website TwoCircles.net. "It was founded by a Muslim guy for giving more space to Muslim issues. I was the first non-Muslim staff, and I chose to look at lower caste experience in India with long-form pieces."

On a bright Monday morning in a small village in Bihar Deepti K.C. and Vayna Mehta were checking in with the financial literacy team of surveyors and trainers who were organizing storytelling activities designed to cover a wide range of formal and informal money management practices. Small ruminants wandered around nearby. (See the work of other IMTFI researchers for the importance of goats  for financial well-being). Unlike printed matter that is merely disseminated to provide basic information through visual communication, the special comic books in plastic sheaths that the trainers used were designed to actively engage unbanked people.

Through the comic books, Deepti hopes that women with limited literacy can still get the message that "everyone should save" and be able to prepare for unexpected events through "saving small amounts on a daily basis." Trainer Rekha was a lively interlocutor with an expressive face and voice who tried to bring the story to life. She says that she has also changed her own financial behavior as a result of being part of the team and now herself uses a financial diary to budget herself.

We began at the home of a woman in "Group E," the group of subjects who were randomly assigned to receive all the services that the field team provided to rural women: financial diaries, lock boxes, and literacy training with the comic book. She had received a machine from the government to start a tailoring business with her husband. A sign on the door warned that activities were being videorecorded, as we waited in her sitting area while she completed her puja, the prayer ritual of devout Hindus. Mehta explained, because of the design of the project, the most needy people weren't necessarily the ones targeted with the most interventions. At the end of each unit, the trainer tested comprehension of major story points and encouraged conversation about applicability and recorded responses on a laptop. Later a surveyor would come and ask the same questions to ensure that the data collected was not impacted by the biases of the trainer. Deepti noted how a one-time survey would have generated much less disclosure.

During the training, other members of the family periodically listened in, and the woman explained that her five-year-old son was now saving for a bicycle based on lessons learned from the comic book. There was money in her lockbox for this purpose, and her financial diaries indicated regular updating, although she had taken a four-day hiatus from her scrupulous record-keeping during the recent festival of Holi.

The training section on informal savings was clearly a message she applied to her life. She was animated in responding about the usefulness of the stories related to storing cash securely and tracking daily financial expenses. These were areas in which she could clearly express her agency, while formal banking was obviously appeared to be a domain of her husband, who was in charge of both their bank account and the mobile phone. She also shared how as a daughter-in-law of the household, she had many limitations and commitments that curtailed her movements like being able to attend the local cooperative society meetings. But she added that she did not really miss them as the issues taken up in those meetings were less interesting to her since they had begun to only focus on the financial inclusion message while leaving out other ways that women could help other women.

The next woman we visited was also in Group E. She was resistant to the educators' message and was very vocal and lamented on the futility of offering financial literacy training to people who didn't have any money.

She was a barber's wife struggling with medical expenses and her financial diary had no entries. She told us that her pen had been stolen and then laughingly added that she was illiterate. She used her lockbox for a single gold piece of jewelry. (For more about the significance of gold, see the blog posting about IMTFI researcher Nithya Joseph who has a forthcoming post in this series.)

The third woman we visited was in a group that received only the financial diary. She had five children and had opened a small shop in her home. Although she was illiterate, her diary was filled with neat entries penned by her son. This included basic provisions (potatoes, lentils, etc.) and expenditures for her children's education (school fees, exam fees, etc.).

Deepti believes that it is very important to engage with questions about the informal sector, because it is often in these spaces that the disadvantaged actually are found to act and express their financial agency more comfortably. She recalled from her last project in Dharavi, a slum in Mumbai that is the largest slum in Asia, "we were trying to understand the business transactions among small entrepreneurs: 100 business owners and 25 women entrepreneurs." (For images of Dharavi, you can see this National Geographic coverage). "They had access to finance, ATMs and bank branches close by. They were using mobile phones, and their employers opened bank accounts for them." These kinds of "direct transactions" are often privileged in financial inclusion work. However, she explained that in these areas "people relied more on informal mechanisms. They always opted for cash transactions. There were behavioral biases."

Deepti thinks that one must not stop here and blame the subjects but instead focuses on embracing the human element. She learned by watching the gaps in effectiveness that emerged when "some sort of information about banking services and financial modules easily available online" without considering why people "could not relate" to the message. These financial literacy pitches "talk about someone coming and telling you what to do, but they don’t talk about lifestyle or choices. They are very preachy with one character doing exactly what they are expected to do, rather than saying there might be another option."

Deepti emphasized the importance of using rigorous experimental methods, even if randomization and the use of control groups might sometimes lead to delayed or displaced reward systems for those most in need. "We could look at only budget and actually create such financial literacy modules and test them." The stories in the comic books were "all based on our research findings about how women save." We even gave pictures from visits to field sites to the designers. "People can relate to comic books. The goal was to ensure that women understand what we are saying by using a character very similar to them."

According to an unpublished draft report, it looks like this approach is working: among those who received only financial literacy training, their savings increased by 8%, while those who received a lock box along with financial literacy training increased their savings by 42-51%, and 77% of women who received financial literacy training reported that they shared their knowledge with others (friends, and family). As Deepti shared enthusiastically, "we noticed during our field visits too, that there was a ripple effect of the literacy program."

Link to comic book, "Financial Literacy for Women Entrepreneurs"  (148,815KB)
Link to comic book, "Financial Literacy Education of Migrant Workers" (39,931KB)
*please allow time to download larger files, we recommend viewing in Firefox, Chrome, or Safari.

Link to project,"Assessing the Impact of Financial Knowledge on Adoption of Mobile Payment Systems among Enterprise Owners in Dharavi, Mumbai"  

[Photo credit: Elizabeth Losh]