This study examines the impact of a financial literacy program on the financial behaviour of microfinance clients in rural areas.
Background
As the microfinance sector grows, pressure mounts on microfinance providers to demonstrate social impact. Many providers refrain from offering non-financial services, claiming that these services are too expensive and outside their area of expertise. The financial decisions made by low-income households show that they may be paying dearly because they have not thought through simple issues related to borrowing and saving (Ananth, Karlan and Mullainathan (2007). One explanation for these suboptimal decisions is that the poor lack the skills and financial acumen to work out financial issues on their own.
In this study, researchers aim to determine whether providing financial education to rural women increases the impact of microfinance.
Approach
The intervention, implemented in partnership with Sonata Finance Private Limited in Eastern Uttar Pradesh, provided financial literacy training to rural microfinance clients with the aim of changing their financial behavior.