Does Providing Women Living in Rural Areas with Innovative Financial Education Change Household Expenditure and Saving Behaviour?

We test whether innovative and intensive treatments can surpass the traditional financial literacy education, with the target group of young women at the age of 20 to 30 in rural Bangladesh. The first treatment follows the traditional approach of financial training intervention: each member would take part in a short course of basic financial knowledge using a standardized curriculum.

We propose the use of the financial diary as a less intensive, and more applicable, as the simplified alternative to the traditional financial literacy program. Financial diaries are believed to help households manage daily expenses: cut unnecessary expenditure and save for unforeseen expenses.

Thirdly, we employ personal coaching as a real but narrower role for "just-in-time" financial intervention, tied to specific behaviours it intends to help. Counselings has the advantage of high relevance, low memory lapse between information receipt and behaviour. This approach is an attempt to test for the claim of "financial education fallacy": while "outsourcing" financial decision can appear to be expensive at first glance, it is a more feasible and cost-effective option once we have taken true cost of effective financial education into account.

We develop a set tests to measure the impact of our interventions on multiple dimensions of financial literacy including financial confidence, financial attitude and financial behaviour. Other objectives measurements involve changes in savings and income, numeracy tests, and a financial knowledge test.

Subject to additional funding, participants will be invited to join an artifactual games to measure the impact of interventions on the treatment group risk preferences and level of financial confidence. Moreover, we plan to further survey participants one year after the program has ended to examine whether improvements in their development outcomes persist over the time

Group A - Financial Diary
This group will receive financial diary / household budgeting training only. Participants will self-record household daily income and expenditure over a 3-month period. Because of the memory lapse, the standard recall survey method in existing literature may fail to detect those life event and the coping strategies of the household. By tracing changes in savings and credit instruments of the households after the event,

After the treatment samples were randomized, research assistant will visit the household to discuss the diaries and clarify any remaining questions. Considering the sensitivity of financial matters, we would make sure all the discussion take place at the presence of the participant's family members, including her husband and in-laws.

To maintain an ongoing and regular relationship with the participants, our field workers will visit households bi-monthly to collect data, cross-verify and provide guidance on how to use the diary to record daily cash inflow and outflow.

One of the most important tasks of each visit is to balance the inflow and outflow of income. For example, if the expenses for a given fortnight exceeds the incomes, the interviewer may choose to follow up to understand where the sources of income has come from. We aim to keep this gap below 10 percent.

The most critical factor of the recruitment for this treatment is the willingness of the household to maintain the financial diary throughout the twelve-month period. We use monetary incentives to encourage the budget-keeping activities: the participant got reimbursement every two-weeks if their diary input meets the aforementioned standard. During each visit, our field worker reminded them about the subsequent incentive money they may get in the next visit.

We keep the diary structure simple for the ease of entry: two main columns representing cash inflows (income/borrowing) and outflow (expenditure/lending). At the beginning of each month, the research assistant will give the subject and illustration of the household's income and expenses of the previous month, highlighting any abnormal overspending activities.

Group B
This treatment follows the traditional approach of financial training intervention: each member would take part in a short course of basic financial knowledge using a standardized curriculum. They would be paid for their time and also based on their performance in the exit tests.

The programs would last for 6 weeks and covers 3 modules as following:
Modules 1: Goals, Income, Expenses and Budgeting
Session 1- Seasonal calendar
Session 2- Establishing Goal
Session 3- Understanding income, expenses and creatinga budget
Session 4- Different types of Expenses and Application to budget tools
Modules 2: Savings:
Session 5- Choosing where to save
Session 6- Creating a savings plan
Session 7- Saving for emergencies
Modules 3: Borrowing
Session 8- Borrowing concepts
Session 9- The cost of borrowings
Session 10- Responsible borrowings
Session 11- Comparing financial services

Training was administered by trainers from the same thaka. Each sessions involved lecturing, group discussions with graphical illustrations and field exercises. The training was conducted in the local language and the course content was modified to suit regional specificities.
Each training day started at 10:00AM and went on till 3:00pm on every Monday in 6 consecutive weeks.

Group C

We randomly selected a subset of participants from each treatment A and B to take up financial counselling. At baseline, counsellors will meet with women to identify their financial problems and design coaching sessions in the following categories: preparing budget, obtaining credit/refinancing debt, opening a bank account or small business advice . Throughout the 12-month period, a counselor will visit the household every 3-months to assist them with any problems that arise with household finances or help the women to prepare the budget for the next quarter.

This treatment group also receive the opportunity to have easy access to expert advice - which means that they can get appointment with a advisor outside of the regular visit. This option would create a valuable opportunity to take advantage of the "teachable moments". The counsellor will be experts hired from local banks and NGO.

2018-08-01

2019-09-30

Financial literacy is measured using four outcomes of interest: financial knowledge, financial confidence, financial behaviour, and financial attitude.
Savings behaviour is measured by household account balance post treatment.
Other outcomes variables of interest include women empowerment and exposure to financial instruments. Details are listed in the pre-analysis plan.

The financial literacy outcomes will be measured by the knowledge, numeracy and scenario-based tests before and after treatment.
The exposure to financial instruments are measured by the likelihood of intention to apply for saving accounts, loan, pension fund, and other tools. Finally, female autonomy is represented by the likelihood of new employment, a rise in income, the intention to open a new business, and the responses to women-empower scenario surveyed questions.

Financial behaviour outcomes will be measured by the performance in the post-treatment lab-in-the-field games: risk-taking, over-confidence, time discount, and leadership. The husband of the household will also be invited to participate in gender games.

Participants are randomly allocated into three different treatment groups. Group A will only receive financial diary tool and guidance, Group B will undertake a financial training using standardised curriculum and Group C will have receive A or B plus the access to tailored financial counselling. The control group will receive none of the treatment.

Randomization done in office by a computer

individual women. randomization would be carried out at the individual level. women from the same villages will be randomized in one of the three treatment groups. control villages will not have any intervention.

Yes

150 villages

1800 women (from 1800 households), roughly 12 women/households per village.

600 women in Treatment A - simplified financial diary. 300 from this arm will receive private counselling
600 women in Treatment B - standard financial education. 300 from this arm will receive private counselling
600 women in Control group.

Assume a minimum detectable effect size of 0.2 standard deviations when standardizing the mean values of the main outcome variables of interest. With a minimum sample size 350 for each group, the detectable effect is: Effect 1: The impact of the financial education workshop (b1), Power = 0.96 Effect 2: The impact of financial diary (b2), Power = 0.92 Effect 3: The joint impact of financial education and financial counselling s (b3), Power = 0.85 (More details in Pre-analysis plan)

Pre-analysis+plan+-+Financial+Literacy+Interventions.pdf