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Financial Education vs. Access to Finance in Transnational Households

Last registered on April 06, 2016

Pre-Trial

Trial Information

General Information

Title
Financial Education vs. Access to Finance in Transnational Households
RCT ID
AEARCTR-0000342
Initial registration date
May 07, 2014

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 07, 2014, 9:13 AM EDT

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

Last updated
April 06, 2016, 11:46 AM EDT

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

Locations

Region
Region
Region

Primary Investigator

Affiliation
University of Michigan

Other Primary Investigator(s)

PI Affiliation
University of Michigan Ann Arbor
PI Affiliation
Jawaharlal Nehru University

Additional Trial Information

Status
In development
Start date
2014-04-30
End date
2016-04-30
Secondary IDs
Abstract
The potential of international migration to provide immediate and large income gains to migrant households have generated interest in programs that can enhance its development impacts. We compare the impact of financial education with that of access to financial services and products, and measure complementarities between the two programs. The study population comprises of households in Cabanatuan, Philippines with a family member abroad. To establish a causal effect, we use random assignment of households to financial education sessions or access to financial services or both. The outcomes of interest are variables related to long-term financial security of transnational households where the migrant workers are mostly female. These include formal saving, remittance expenditures, borrowings, wages and entrepreneurial activities.
External Link(s)

Registration Citation

Citation
Barua, Rashmi, Dean Yang and Dean Yang. 2016. "Financial Education vs. Access to Finance in Transnational Households." AEA RCT Registry. April 06. https://doi.org/10.1257/rct.342-3.0
Former Citation
Barua, Rashmi, Dean Yang and Dean Yang. 2016. "Financial Education vs. Access to Finance in Transnational Households." AEA RCT Registry. April 06. https://www.socialscienceregistry.org/trials/342/history/7539
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Experimental Details

Interventions

Intervention(s)
Individuals who are more able and self-motivated enough to enroll in financial literacy training are also more likely to make sound financial choices. There is an obvious selection bias if those with high levels of financial literacy are different than those with low levels of financial literacy. OLS estimates of the effect of financial literacy on financial decisions and outcomes would be biased as we might end up attributing differences in savings levels to unobserved differences rather than financial literacy. For instance, Meier & Sprenger (2008) show that individual time preference may explain who chooses to become financially literate. At the same time, discount rates are an important determinant of individual saving patterns as a person with a high discount rate would place lower value on future rewards. If we do not control for this unobserved heterogeneity in time preferences across individuals, we will get biased estimates.

In order to establish a causal effect, our study uses random assignment of transnational households to financial literacy training. We seek to evaluate the effect of a financial literacy program and access to financial services.

Filipino overseas workers and their families are our target population. The Philippines is the second largest migrant-sending country and the third largest remittance receiving country in the world. The concentration of Filipino women as international migrants is striking; 87% of international migrants in the services sector from the Philippines in 2010 were women. Among these, 70% were domestic workers.
Intervention Start Date
2014-04-30
Intervention End Date
2015-12-31

Primary Outcomes

Primary Outcomes (end points)
Through financial education migrant households may be better able to allocate the remittances to productive investments. After all, besides their direct impact on current family incomes, remittances are used to fund future investments. In fact, for many households with limited access to credit, remittances may be their only source of finance. Thus, remittances are channeled into investment goods or for small businesses. Families also use them to pay school fees, thereby investing in human capital. A small component of remittances are also used to purchase land and property, as well as to repair and upgrade homes. We would establish the impact of the program by tracking these outcomes via surveys implemented among migrant families during the course of the research project. Further, through the administrative data provided by ASKI and BPI, we would be able to study the usage of financial products and microloans by both migrants and their households.

If we have enough funds to survey migrants located abroad, we will also measure the effect on migrant savings, remittance amounts and channels, frequency of remittances and communication between the migrant and households.

The study team will administer migrants and origin households a baseline survey. Usage of financial products at ASKI and BPI will be tracked using administrative data. A pre-analysis plan for analyses to be conducted will be lodged with The Abdul Latif Jameel Poverty Action Lab (JPAL) prior to the start of baseline fieldwork to forestall later concerns about selective reporting of results. Endline surveys conducted 12 months later will establish impacts on financial outcomes more broadly (beyond outcomes that can be observed in the administrative data).

Randomization ensures that observations are similar on average across treatment conditions, so simple comparison of means across treatments establishes impacts. The primary interest is in outcomes such as control over remittances, savings, remittance amounts and frequency, educational expenditures, housing investments etc.

Examining the impact of financial education and the provision of financial services on various financial decisions and outcomes suggests running the following regression:

Yi = f + b1R1i + b2C1i + b3R1iC1i + ei

Let Yi be the value of a dependent variable of interest, such as savings, control over remittances, amount and frequency of remittances, educational or housing expenditures of households in the Philippines, etc. R1 is an indicator variable indicating assignment to treatment groups in row 1 of the chart, and C1 is an indicator variable for assignment to treatments in column 1. The constant term f is the value of the dependent variable for households who were assigned to Treatment 0, while ei is a mean-zero error term. The coefficients b1 and b2 provide the impact of the financial education program and financial services access respectively while the coefficient b3 measures of the complementarity of providing both financial education and services to the migrant and their household.
Primary Outcomes (explanation)

Secondary Outcomes

Secondary Outcomes (end points)
Secondary Outcomes (explanation)

Experimental Design

Experimental Design
The IPA survey team will administer a baseline survey to consenting migrant households upon locating them using the contact information provided by OWWA or through the door-to-door campaign. Migrants at this point will most likely be already abroad. We interview the household head among remaining household members.

The study sample will then be randomly subdivided into different treatment conditions on-site. First, households will be randomized into either a financial education treatment, or into a group that receives no financial education at all. Second, households will be independently cross-randomized into being offered access to formal credit, insurance, and savings products, or into a group that is not offered financial access. This will generate four treatment conditions with 450 households in each. The chart below maps the four groups:

Treatment 0 (control group): This is the control condition: No offer of financial education program and/or financial services. The sealed envelope will merely contain a “thank you” letter for participating in the baseline survey.

Treatment 1: Invitation to attend a financial education program: The household head will be invited to attend a short workshop on financial education in ASKI’s training center. The workshop will be free and will be scheduled on a Saturday. It will last 6-8 hours and will be completed in one day. To facilitate take-up, the household head will be allowed to bring a companion. A letter will provide details and will ask the household head to indicate interest in the program. OWWA will also provide a letter endorsing participation in the financial education program, which we expect to raise take-up.

Treatment 2: Access to financial services and products: This treatment group will only be provided access to financial services and products and will not be offered any form of financial literacy training. In particular, they will be invited to avail of 4 different products:

1. A BPI Savings Account – a regular savings account with low required maintaining balance, which can be used to receive remittances from migrant members abroad.

2. ASKI microloan – a small loan for enterprise development.

3. ASKI micro-insurance - accident or property insurance. Accident insurance covers losses caused by accidental death or bodily injury due to accident occurring in any place in the world. Property insurance covers property damage resulting from a peril.

Households in this treatment group will be provided with a letter that specifies requirements, and would indicate instructions from where and how they can avail of the products in addition to specifying a contact person to talk to. In addition, the surveyors will offer households immediate registration for a ASKI micro-insurance product, should they wish to register on the spot.

Treatment 3: Invitation to a financial education program and access to BPI Financial services and ASKI microloan facilities: This treatment group will be invited to attend both a financial education workshop and given access to financial services offered by BPI and ASKI, as in households in treatment groups 1 and 2.

The offer to attend a financial education program and to avail of financial products constitutes an encouragement design, since in practice we cannot prevent migrants and households from accessing these services independently. That said, past research (Ashraf, Aycinena, Martinez & Yang 2011) shows that mere offers and assistance with opening bank accounts lead to large differences in bank account usage in transnational households. Doi, McKenzie, and Zia (2012) find that attendance rates for financial literacy training in Indonesia have a high take-up rate when offered for free and done in coordination with accredited recruitment agencies, even when the training is done separately for migrant workers and family members. Their experiment involved assigning migrants to a migrant-only training group, a family member-only training group, and a joint training group. The take-up rates were 81.2 percent, 76.5 percent, and 65 percent respectively. We expect our offers to be similarly effective, as the government endorses it.
Experimental Design Details
Randomization Method
Randomization will be conducted on-site
Randomization Unit
Randomization will be at the household level.
Was the treatment clustered?
No

Experiment Characteristics

Sample size: planned number of clusters
1,800 households
Sample size: planned number of observations
1,800 households
Sample size (or number of clusters) by treatment arms
450 households control
450 households financial services only
450 households financial education only
450 households financial education + financial services
Minimum detectable effect size for main outcomes (accounting for sample design and clustering)
Assumptions: Assume a minimum detectable effect size of .2 standard deviations when standardizing the mean values of the outcome variables of interest. Assume a take-up rate for the invitation to attend the financial education workshops of 90%. This is based on Gibson, McKenzie, and Zia (2012) and Doi, McKenzie, and Zia (2012) who also run financial literacy training workshops for migrants. Assume take-up rates for offered financial products to be 80%. In other words, 80% of study participants use some financial product, whether credit or savings, when offered to them. The assumption is based on a midrange of take-up rates for field experiments that study random provision of credit or savings products. Effect 1: The impact of the financial education workshop (b1) Power = 0.9684 Effect 2: The impact of financial services (b2) Power = 0.9242 Effect 3: The joint impact of financial education and financial services (b3) Power = 0.8508 Ultimately, even beyond these power calculations, we are confident that 1800 households is an adequate sample size to detect our main effects, even for our mini-experiment in Singapore and Hong Kong where the financial education treatment group involves training migrants abroad. The study by Doi, McKenzie, and Zia (2012), who look at similar outcomes, had enough power to detect statistically significant effects even with a sample of only 400 migrant households randomized into three treatment groups. According to administrative data by OWWA, 19.7% of migrants departing for abroad from Cabanatuan City went to Singapore and Hong Kong in 2013. Hence, we expect to obtain a similar subsample of around 355 for the mini experiment.
IRB

Institutional Review Boards (IRBs)

IRB Name
Innovations for Poverty Action Institutional Review Board
IRB Approval Date
2014-04-15
IRB Approval Number
IRB1049
Analysis Plan

Analysis Plan Documents

Pre-Analysis Plan (Financial Education vs. Access to Finance in Transnational Households)

MD5: 22019906e419db63b773a7a0d15b81aa

SHA1: 4cc8852afe0360ca516755ca27352dd806761444

Uploaded At: April 06, 2016

Post-Trial

Post Trial Information

Study Withdrawal

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Intervention

Is the intervention completed?
No
Data Collection Complete
Data Publication

Data Publication

Is public data available?
No

Program Files

Program Files
Reports, Papers & Other Materials

Relevant Paper(s)

Reports & Other Materials