Context of the Evaluation:
This study is ongoing in three countries: Malawi, Uganda, Chile. We are currently exploring options to add a study site in the Philippines. The aim is to understand the causes and consequences of the lack of access to banking services in a variety of contexts.
Malawi: Malawi’s population is largely rural, with agriculture supporting over 85 percent of the population [4]. A 2009 study found that 55 percent of Malawians do not have access to any type of financial institution, formal or informal; furthermore, only 19 percent of the overall population uses a formal bank [2]. In Malawi, the study is being conducted in the Southern Region, which has lower than average levels of bank usage and financial inclusion [2].
Uganda:A 2006 study found that 62 percent of Ugandans do not have access to any type of financial institution and only 16 percent of the population uses a commercial bank [2]. Total savings remains low: from 1999-2009, Uganda's gross domestic savings averaged 9.3 percent, compared to 21 percent worldwide and 12 percent for the least developed countries [3]. In Uganda, the study is being conducted across several districts in the southwest of the country.
Chile:Although Chile boasts an upper-middle-income economy, such prosperity is not universally shared. In 2009, Region IX – the target region for the study – reported the highest incidence of poverty in the country at 27.1%, nearly double the national average [3]. And although Chile has a vibrant financial sector, an IPA-led pilot exercise in the target region revealed that 33% of the population does not use a savings account.
Philippines:The Philippines has reached a medium level of deposit account usage, with around 50 accounts per 100 people in 2009. (Globally, there are more savings accounts than people.) [1] While this is to be celebrated, financial inclusion for rural populations has lagged, and 37% of municipalities did not have access to banking services in that year [7]. Recently, however, the mobile money sector has developed, enabling anyone with a mobile phone to conduct basic transactions. Mobile banking services have great potential to provide access to the rural poor in this context.
To evaluate the impact of access to a formal savings product, the researchers have partnered with a commercial bank or credit union at each site.
Description of Intervention:
In each site, IPA identified a partnering financial institution and selected rural areas in which the partnering institution is operating. A probabilistic sampling strategy was then used to enroll into the study a representative sample of unbanked households in those areas. Upon enrollment and completion of a baseline survey, study households were randomly assigned to either a treatment or comparison group. Those assigned to the treatment group received a voucher enabling them to open an account, at no cost to themselves, with the local branch of the partner institution. They also received procedural assistance with account opening. Take-up of the account offer varied from 20% in Chile to 78% in Malawi.
Follow-up surveys at 6-, 12- and 18-month will be used to estimate the impacts on a range of household activities, including agricultural and business practices, expenditures, household income, response to shocks, and savings and credit practices.Qualitative data will be collected to understand the mechanisms through which access to a bank account affected (or not) the study participants.
Results and Policy Lessons:
Results forthcoming.
1. CGAP. 2009. Financial Access 2009: Measuring Access to Financial Services around the World. World Bank Group.
2. FinScope Malawi funded by the UK’s Department for International Development (DFID). Demand Side Study of Financial Inclusion in Malawi. 2008. http://www.finscope.co.za/documents/2009/Brochure_Malawi08.pdf
3. Dupas, Pascaline and Jon Robinson. 2009. Savings Constraints and Microenterprise Development: Evidence from a Field Experiment in Kenya. NBER: Working Paper 14693.
4. Reserve Bank of Malawi. 2008. The Malawi Economic and It’s [sic] Banking System. http://www.rbm.mw/documents/basu/MALAWI%20ECONOMY%20AND%20BANKING%20SECTOR.pdf
5. FinScope Uganda. 2007. Results of a National Survey on Access to Financial Services in Uganda. Final Report. August. http://www.fsdu.or.ug/pdfs/Finscope_Report.pdf.
6. World Bank. 2010. World Development Indicators 2010 [Online Database]. Washington, DC: The World Bank.
7. Jimenez, Eduardo C. 2010. Financial Access: An Essential Condition. Presentation at the OECD-Banque du Liban Conference on Financial Education. http://www.oecd.org/dataoecd/57/21/46256657.pdf