Increasing Financial Digitization and Inclusion in Emerging Economies: Evidence from Armenia.

Last registered on December 14, 2023

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Pre-Trial

Trial Information

General Information

Title

Increasing Financial Digitization and Inclusion in Emerging Economies: Evidence from Armenia.

RCT ID

AEARCTR-0011398

Initial registration date

May 11, 2023

Initial registration date is when the trial was registered.

It corresponds to when the registration was submitted to the Registry to be reviewed for publication.

First published

May 17, 2023, 2:35 PM EDT

First published corresponds to when the trial was first made public on the Registry after being reviewed.

Last updated

December 14, 2023, 12:10 PM EST

Last updated is the most recent time when changes to the trial's registration were published.

Locations

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Primary Investigator

Name

David Murphy

Affiliation

Colgate University

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Other Primary Investigator(s)

PI Name

Naneh Hovanessian

PI Affiliation

Central Bank of Armenia

Contact Investigator

PI Name

Aleksandr Shirkhanyan

PI Affiliation

Central Bank of Armenia

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Additional Trial Information

Status

In development

Start date

2023-06-05

End date

2025-08-31

Keywords

Behavior, Education, Finance & Microfinance

Additional Keywords

Mobile banking, financial inclusion, financial literacy, social networks, Armenia

JEL code(s)

O12, G53, D83

Secondary IDs

Prior work

This trial does not extend or rely on any prior RCTs.

Abstract

Access by individuals and businesses to beneficial and inexpensive financial services and products, also known as financial inclusion, is a critical pathway to poverty alleviation and economic growth in developing countries. While Armenia, the location of this study, has made many advances in financial inclusion over the past two decades, persistent geographic inequities between urban and rural regions mean that those outside the capital city have significantly lower levels of financial service adoption. To this point, most related programs in Armenia have focused on increasing financial inclusion through increasing financial awareness and literacy. Greater financial literacy, however, is likely a necessary but not a sufficient condition for broad financial inclusion in rural regions of Armenia. Awareness of financial products and an understanding of how they function can lead to greater demand for the product. However, even if demand exists, there can be significant constraints to greater financial inclusion. Rural residents must usually travel to larger towns to engage with the financial sector, which can potentially involve significant opportunity costs. This project thus plans to addresses this geographic constraint by taking advantage of the decreasing price of internet and internet-connected phones in Armenia, which has led to greater prevalence of these devices in rural villages. The intervention in this program focuses on training individuals in using mobile financial apps in rural villages, and using incentives to generate diffusion of this technology through the social networks of those trained. This project thus fills gaps in our knowledge both in the specific context of Armenia and in the general economics literature as to whether incentivized diffusion of mobile banking apps can lead to greater financial inclusion and positive economic outcomes. A better understanding of efficacy of this potential mechanism can allow better policy to be designed in various developing country contexts.

External Link(s)

Registration Citation

Citation

Hovanessian, Naneh, David Murphy and Aleksandr Shirkhanyan. 2023. "Increasing Financial Digitization and Inclusion in Emerging Economies: Evidence from Armenia.." AEA RCT Registry. December 14. https://doi.org/10.1257/rct.11398-2.0

Sponsors & Partners

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Experimental Details

Interventions

Intervention(s)

Following the baseline survey, villages will be randomly divided between the three groups. Trainers will visit households randomly selected to be trained in the two treatment groups of villages twice. On the first visit, the trainers will help the household set up and apply for a mobile banking account. During the second visit the trainers will teach the household members how to use the account. Those in relevant treatment group will be eligible to receive microrewards for use of mobile banking app. Will receive micro-payments for paying bills with app, depositing money, when someone they refereed opens an app, etc.

In the final phase, we will conduct an endline survey with all households to evaluate the impact of the program on various economic and financial outcomes. With our experimental design, we would also be able to measure whether offering incentives for mobile banking adoption and use increases the impact of the program on any of these outcomes.

Intervention Start Date

2023-09-01

Intervention End Date

2024-12-31

Primary Outcomes

Primary Outcomes (end points)

Mobile bank account adoption, mobile bank account usage (e.g. paying bills, receiving/sending funds, depositing funds, applying for/receiving loans, saving money), financial literacy, level of savings, expenditures, income, entrepreneurial activity.

Primary Outcomes (explanation)

Secondary Outcomes

Secondary Outcomes (end points)

Education and health expenditures, level of social capital, network centrality, relationship ties.

Secondary Outcomes (explanation)

Social capital to be measured by quality/strength of relationships between individuals in the village (whether trust each other, share information with each other, etc). Network centrality to be measured using statistics such as closeness, degree, betweenness, etc.

Experimental Design

This will be an experimental study (RCT). There will be three treatment groups: 1) a pure control group, 2) villages in which a random subset of households is trained in mobile banking, and 3) villages in which a random subset of households is trained in mobile banking and who receive incentives to use the banking app and to teach others to use it.

Experimental Design Details

Not available

Randomization Method

The proposal calls for a several-stage randomization process, with proposed percentage allocations determined through simulations:
1. Villages are randomly selected to be included in the program. Using 2011 census data, we include villages from seven statistical districts: Dilijan (Tavush), Ijevan (Tavush), Tumanyan (Lori), and Spitak (Lori). We then omit all villages with fewer than 275 individuals (according to the 2011 census), greater than 1400 individuals, or villages solely comprised of an ethnic minority (e.g. “Malakan”). This leads to a pool of 41 villages.
2. From each included village, 20% of households are randomly selected to be included in the program. Conditions for inclusion are that the household includes at least one permanent member who is younger than 55 (those aged 55 and older may be too unfamiliar with ICT to participate).
3. We randomize villages into three groups:
a. Group A: Apx. 30% into “Pure Control” villages that receive no aspects of the program in any form.
b. Group B: Apx. 30% placed into “Training” villages in which a random sample of households will receive training and assistance in installing and using the mobile banking application, and
c. Group C: Apx. 40% placed into “Incentive and training” villages, in which a random sample of households will receive the same training as “training” villages, but where adoptees/users of the app will receive incentive payment(s).
4. We randomize households in village groups “B” and “C” into two groups:
a. Training households: 20% of the randomly selected households from step 2 are placed into group invited for training and assistance for the mobile app.
b. Spillover households: 80% of the randomly selected households from step 2 are placed into a “spillover” group.

Randomization Unit

Villages to be randomly assigned to training and incentive, training, and control. Randomly selected households in the training and training and incentive villages to be randomly assigned to be given training.

Was the treatment clustered?

Yes