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Financial education 28 Sep 2018

Six researchers and a challenge: to improve the well-being of society

The Center for Financial Education and Capability’s first Call for Expressions of Interest (EOI) has brought visibility to the work of five research teams who are developing solutions to address challenges in financial education.

Each of these projects is backed by a group of people who are dedicating their efforts to provide solutions to challenges related to financial education and inclusion.

Concern for Society

Their reasons for getting involved in this mission are varied: “I am passionate about understanding human behavior,” explains Catherine Estrada-Mejia from the Universidad de Los Andes (Colombia), who is researching financial health with the aim to contribute to the general well-being of humankind. “Financial decisions can result in immense prosperity, but they can also destroy the future for individuals and families. I believe that in our quest to improve the well-being of individuals, it is vital to understand how they make financial decisions; to study psychological, environmental, and institutional factors that impact individual decisions; and to define strategies to help better decision-making. Estrada-Mejia is very clear about the goals of her research: “to obtain a measurement of financial well-being in Colombia that can be used in a follow-up longitudinal study; to identify and define groups of people with high and low levels of financial well-being; and to identify knowledge, attitudes, and habits related with financial decisions that contribute to greater financial well-being across all income levels.”

Alfredo Burlando at the University of Oregon (USA) is motivated by time he spent as a post-graduate student in Tanzania where he experienced firsthand how useful bank transfers are. His interest in technology as a method for financial inclusion in the most remote rural areas was sparked when using M-Pesa, a service for mobile devices. “M-Pesa fostered a huge amount of technological innovation in East Africa. Banks use it to provide remote access to savings accounts, and technology companies have created mobile money protocols that are used to make wholesale payments.” explains Burlando. “Although this wholesale payments technology targets medium and large companies that need to pay salaries to employees in remote areas, this technology can also play a significant role in agricultural value chains” With his research, Burlando wants to develop “some ideas about how farmers can transition from a cash economy to a digital economy.”

Financial education and inclusion for Latin American women is the challenge that has inspired a partnership between Rodrigo de Reyes of (Fundación Capital) and Mathew Bird from the Universidad del Pacífico (Peru). Their study focuses on LISTA, an initiative that is based on using a mobile application to develop financial skills and capabilities. The results of this initiative have been positive for the women involved, although there may have been some negative consequences: “Indeed, we encountered increased financial knowledge among the women involved, an improved attitude regarding the financial system, which has resulted in financial performance improvements.” explains Reyes and Bird. “However, we were not able to establish if they assumed more control over the household’s economic resources and if this empowerment involved changes in the spousal relationship that could result in an increase or decrease in domestic violence.” This concern led them the primary topic of their research: “We want to understand if LISTA’s financial education strategy is changing the power relationship within the family, and if so, how, and if it is thus influencing violence within the relationship.” Their mission is “to improve the design of financial education strategies that are aimed at the bottom of the pyramid, specifically at women.” 

Research conducted by Carly Urban at Montana State University (USA) focuses primarily on young people: “I want to understand the effect having a bank account has on a young person and how it influences financial behaviors later in life“. The questions pile up when taking on this challenge: “Is it more possible for those who have had greater access to bank accounts at an early age to have bank accounts as adults? Is it more likely they will save for an emergency? Are they more skeptical about social welfare programs?”

AMAFORE’s Jean Paul Madrigal is tackling another challenge related to financial education, a challenge that represents “a pending task within the Mexican population”: retirement. In a country that is one of the least prepared for retirement, the challenge is: “through rigorous research to make advances in knowledge that will provide us with better inputs for the design, implementation, and evaluation of strategies that promote financial planning for retirement.” Madrigal is aware of the difficulty involved in persuading the general population of the importance of saving, of looking ahead at something that will only occur in the very long term. This is why “the study assesses what kind of strategies — rational or emotional — are most effective for creating awareness and, thus stimulating financial planning.”

Supported by BBVA

Although it may seem like these researchers have different approaches, they have something in common: a desire to use financial education and inclusion to improve the opportunities and well-being of humankind. They all agree that BBVA has provided a significant boost in tackling this challenge. “Leadership in financial education from a heavyweight like BBVA gives it the important standing it should always have.” say Reyes and Bird. Carly Urban emphasizes the independence the teams have when it comes to conducting their research. “BBVA has the integrity to support our findings, regardless of the outcomes that have answered the research questions.” Once again, these passionate researchers have something in common, this time aligned to BBVA’s mission, which Estrada-Mejia sums up perfectly: “With these research and educational initiatives, I think we are contributing to the well-being of society as a whole”.

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