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Financial literacy as a means to female empowerment Impact Evaluations in India

Financial literacy as a means to female empowerment Impact Evaluations in India. Bilal Zia (DECRG). Introduction & Motivation. Financial literacy is now a prominent feature of financial reform across the globe: US : President’s Advisory Council on Financial Literacy

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Financial literacy as a means to female empowerment Impact Evaluations in India

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  1. Financial literacy as a means to female empowermentImpact Evaluations in India Bilal Zia (DECRG)

  2. Introduction & Motivation • Financial literacy is now a prominent feature of financial reform across the globe: • US: President’s Advisory Council on Financial Literacy • Indonesia: 2008 was “Year of Financial Education” • India: RBI has established Financial Literacy and Credit Counseling Centers • International and Private organizations are also very interested in financial literacy programs: • Citi Foundation: 4 years into a 10-year $200 Million global program on financial education, operating in 65 countries • World Bank

  3. Why So Much Interest in Financial Literacy? • Compelling survey evidence from developed countries shows strong positive correlation. HHs with low financial education: • Tend not to plan for retirement (Lusardi and Mitchell, 2007a) • Borrow at higher interest rates (Lusardi and Tufano, 2008; Stango and Zinman, 2006) • Acquire fewer assets (Lusardi and Mitchell, 2007b) • Participate less in the formal financial system (Alessie, Lusardi and van Rooij, 2007; Hogarth and O.Donnell, 1999).

  4. Similarly in developing countries, financial literacy: • Positively associated with financial sector participation, education, cognitive ability and wealth in Indonesia and India (Cole, Sampson and Zia, 2009). • Positively associated with financial participation and negatively associated with informal borrowing (Klapper and Lusardi, 2009).

  5. Outstanding Question • Is this relationshipcausal?

  6. Why is this Question Important? • Research on this question will help us understand: • Are financial literacy programs effective tools for improving financial sector participation? • Can financial literacy programs be used to “empower” women? • By making them better financial decision makers • By improving their bargaining position within the household • What kinds of behavior change can such programs elicit? Does this vary by gender? • Identify mechanism of behavior change for women vs. men  v. useful for targeted policy • What kind of general equilibrium effects can such programs garner? Does this vary by gender? • Do women invest more in children’s education and health from extra savings? • Are women more likely to borrow for college expenses for children?

  7. Savings, Credit, Budgeting and Insurance:Impact Evaluations in India • Largest mainstream issue is how to get individuals to save, budget, and use credit responsibly. • Interactive, Video-based financial literacy on savings, credit, budgeting and insurance in India • Locally produced videos using field tested content and local community actors. Followed up by interactive session with local staff. • Some individuals also get individual appointments with a financial counselor • Women vs. Men: • Test change in knowledge from attending the program • Test change in behavior, short-term and long-term • Test general equilibrium effects

  8. Project Status • Video production is completed • Partner MFI and target groups have been identified • Baseline survey designed and pilot-tested • Implementation started in November. Expected to be completed my early/mid 2010

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