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Financial education 16 Jul 2018

BBVA Center for Financial Education backs five state-of-the-art research projects

The BBVA Center for Financial Education and Capability has selected the winning projects in its first Call for Expressions of Interest (EOI). The projects stand out because of their innovative nature and offer solutions to the challenges of financial education on a global level.

Last March, José Manuel González-Páramo, BBVA Executive Board Member and Head of the Advisory Board of the Center for Financial Education and Capability, underscored the importance of supporting research into financial education as an essential element in the sustainability of economic growth. In the same month, coinciding with Global Money Week, the Center invited the research community to propose studies relating to financial education in the world in a range of areas such as financial education in the digital world, financial health, behavioral economics and sustainable finances.

The projects stand out for their quality and variety of topics and geographical areas. The five research proposals selected will receive financial support totaling €50,000. The reward will help support the development of their work whose conclusions will assist in driving financial education, introducing new solutions and in improving people’s lives.

The selected research projects are as follows:   

Training in new credit technologies for the rural sector  

Agriculture in developing countries needs lending to flow for investment and to deal better with the cyclical nature of revenues due in large part to climatic factors. However, many farmers face problems in obtaining finance when they need it, even when they are profit-making. To address this situation, Alfredo Burlando (Oregon University), Jessica Goldberg (Maryland University) and Silvia Prina (Case Western Reserve University) have analyzed the needs of the sector in their study: ‘Milking it for all it’s worth: Digital credit and payments in the dairy sector’ .

The solution they have proposed is to develop digital loans, a type of automated and on-the-spot financing that helps alleviate the problems of the sector. In this phase of their study, the experts are focusing on the dairy sector. Their aim is to produce a loan product known as Mo-Kash for farmers in rural areas in Uganda and promote payment digitalization. The field work will be carried out through Innovations for Poverty Action (IPA). The final goal is to train farmers in the use of these new technologies, gauge whether they encourage the adoption of Mo-Kash and find out what the impact is on the daily work of this people.

Bank accounts for children: Shaping future behavior 

Behavioral economics and how it relates to financial capability is becoming increasingly important. An example of this is the research proposal named ‘Youth Bank Accounts and Later-in-Life Financial and Economic Self-Sufficiency’ by Carly Urban and J. Michael Collins (Montana State University). The project will focus on how bank accounts for children in the United States later affect their financial behavior. “We can see that children with able and motivated parents are more likely to have bank accounts and make better financial decisions”, the experts explain in their study. On this basis, the researchers have developed an indicator of the differences in State laws governing ownership of bank accounts for minors. The study aims to show that widening access by minors and young people to a bank account improves financial performance and that such widening should be encouraged by, for example, changing the current regulations.

Financial health to improve welfare

Financial health is another one of the topics that featured prominently in the Center’s first EOI. The research work ‘Measuring financial well-being in Colombia’ by Catalina Estrada-Mejía (Universidad of The Andes) stood out in this field. The study will first look at the effects of financial behavior on the welfare of individuals and their families and then propose solutions to improve financial welfare through  specific financial education and inclusion programs. As Estrada-Mejía explains in her study: “Our objective is to identify the attitudes and behavioral patterns most susceptible to change which, if included in the right way in financial education and inclusion programs, could have a significant impact on the financial welfare of people”.

Financial Education for ensuring a more comfortable retirement

The selected study in the area of behavioral sciences and longevity is entitled: ‘The application of financial education in retirement planning: An experimental study among the working population’ by the Mexican Association of Pension Fund Managers (AMAFORE). The goal of the study is to design and put in place a strategy for financial education that provides people with the best tools for making decisions on retirement. Financial education in this case should “complement awareness of the importance of thinking about and planning for this stage of life”.

An application to improve relations among couples

How does the development of the financial know-how of a household affect partner relationships? That is the question Matthew Bird (Pacífico Business School, Universidad del Pacífico) and Rodrigo de Reyes (Fundación Capital) try to answer in their study: ‘Tablet-based Financial Education and Intimate Partner Relationships: Evidence using the Day Reconstruction Method in Colombia’. The money from the award will go to gathering data that can show how an application developed by Fundación Capital aimed at mothers having better control over family finances can help reduce conflict, including violence, within a couple.

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