EVALUATING  THE  IMPACT  OF  DELIVERING  CCTS  THROUGH  THE  BANK  AND  FINANCIAL  EDUCATION  

Claudia  Mar<nez  Alvear  Catholic  University  of  Chile  September,  2014  

MAIN  POINTS  

§ Research      Agenda  § Two  RCT  evaluaRons  in  Chile  on  financial  inclusion:  

•  Chile  CUENTA:  EvaluaRng  the  impact  of  delivering  CCTs  through  the  bank.  

•  EvaluaRng  the  impact  of  Financial  EducaRon  Program.  

RESEARCH AGENDA § A  research  agenda  has  been  developed,  based  in  “Todas  Cuentan”  § Research  plaYorm  that  promote    programs  evaluaRon  on  financial  inclusion.  § The  aim  is  to  idenRfy  soluRons  for  the  local  problems  (resource  management,  women  empowerment).  § The  plaYorm  has  incorporated  regional  research.    § The  project  is  funded  for:  ­  The International Development Research Centre (IDRC). ­  Institute for Peruvian Studies.

­  Fundación Capital.

§ In  Chile,  the  plaYorm  has  financed:  ­  Chile CUENTA evaluation.

­  Financial Education evaluation. ­  “Saving accounts” evaluation.

CHILE  CUENTA  

 Abhijit  Banerjee    Massachuse]s  InsRtute  of  Technology  

 Claudia  Mar2nez  A.  

 Universidad  Católica  de  Chile  

 Esteban  Puentes    Universidad  de  Chile  

MOTIVATION  §   Strong  increase  in  CondiRonal  Cash  Transfer  (CCT)  in  the  region  +  concerns  on  lack  of  financial  inclusion.  

•  Subsidies  payment  through  the  back  accounts.      

§ However,  no  clear  the  evidence  about  the  addiRonal  benefits  that  the  nexus  between  the  CCT  program  and  this  policy  could  generate  (De  los  Ríos  &  Trivelli  2011).  

•   Samaniego  y  Tejerina  (2010)  and  Maldonado  y  Tejerina  (2010)  detect  li]le  use  of  the  bank  accounts  between  the  CCTs  beneficiaries  (Oportunidades,  México).  

•  Seira  (2010)  detects  posiRve  impact  in  the  beneficiary’s  formal  savings  that  get  their  benefits  through  their  bank  accounts  (Oportunidades,  México).  

 

CONTEXT  

§ ¿What  is  Chile  CUENTA?  • This  program  changes  the  way  in  which  the  social  benefits  are  delivered:  the  cash  subsidies  payment  changes  to  the  bank  account  subsidies  payment.    

§ ¿Who  implements  it?  • The  Ministry  of  Social  Development  (Chilean  Government).  

§ ¿What  is  the  goal?  • To  improve  poor  people’s  financial  access.    

EVALUATION  DESIGN  

§ Sample:  Five  municipaliRes  of  SanRago,  Chile    

§ Time  frame:  program  implementaRon  started  in  October,  2012.  Follow  up:  Late  2014.  

 

§ Treatment  arms:  § Control  group:    

• Puente  Program  beneficiaries  who  receive  their  social  benefits  in  cash.    • N=810  

§ Treatment  group:    • Puente  Program  beneficiaries  who  receive  their  social  benefits  in  cash  and  get  the  chance  to  receive  the  subsidies  payment  trough  bank  account.    

• N=2,422  

EVALUATION  IMPLEMENTATION  

§ The  take  up  55%  rate  of  all  treatment  group  allows  to  find  0,22  sd  effect  (US$8  monthly  average  saving  in  last  three  month).    

34%

55%

11%

Take up Chile CUENTA

Rechazados Aceptados No aplica

    [1]   [2]   [3]   [4]   [5]  

Municipality   N Treated  N Rejected   Total accepted  Don’t apply   Take Up (3/1)  

Puente Alto   736   275   333   128   45%  

Peñaflor   224   71   144   9   64%  

Maipú   370   112   227   31   61%  

San Bernardo   811   279   456   76   56%  

Conchalí   281   81   164   36   58%  

TOTAL   2.422   818   1.324   280   55%  The  treatment’s  individuals  that  didn’t  get  Chile  CUENTA  offer  aren’t  consider.    

PROCESS  EVALUATION  

§ Process  EvaluaRon  in  parallel  to  the  implementaRon.  

§ EvaluaRon  AcRviRes:  Focus  Group  and  Interviews.  The  scheme  shows  the  most  important  results.  

Posi>v

e  Po

ints  

Comfort.    OrganizaRon.  Speed.    Bank  account  use.    Security.   N

ega>

ve  Points   Date  change.  

Statement  accounts  are  received.    Li]le  informaRon  about  bank  account  balance  and  charges.    

Other  Points   Chile  CUENTA  as  a  

good  mechanism  for  money  management  but  not  as  a  saving  incenRve.  Management  problems.    Extra  work  to  “Family  support”.  

Ø  The  main  obstacles  are  management  problems.  

Ø  People  appreciate  the  possibility  to  administrate  their  money  through  a  bank  account.  

NEXT  STEPS  

§ Follow-­‐up  survey:  December  2014  

§ Analysis:  May  2014  

FINANCIAL  EDUCATION  

 Claudia  Mar2nez  A.  

 Universidad  Católica  de  Chile    Esteban  Puentes  

 Universidad  de  Chile  

 Alejandro  Drexler    University  of  Texas  at  AusRn  

MOTIVATION  

§ No  clear  evidence  of  what  works  (Xu  and  Zia  2012).  • Rules   of   thumbs   are  more   effecRve   than   regular   training   in   affecRng   business   pracRces  (Drexler,  et  al.  2012).  

• In   general,   financial   educaRon   programs   don’t   have   effects   on   sales   or   business   profits  (Karlan  and  Valdivia  2012).  

• In   Chile  Mar<nez,   Puentes   and   Ruiz-­‐Tagle   (2013)   studied   the   gather   impact   of   financial  educaRon   and   assets   transference.   They   detected   a   posiRve   effect   on   beneficiaries’  income.      

CONTEXT  § ¿What  is  the  program  about?  • 20  hours  of  group  workshop.  • Oriented  to  “Microempresa”.  • Four  modules:  1.Budget;  2.Saving;  3.Household  wealth  and  indebtedness;  4.  Investment.  

§ ¿Who  implements  it?  •   FOSIS  (MDS).    

§ ¿What  is  the  goal?  •   Provide  financial  tools  and  informaRon.  

EVALUATION  DESIGN  

§ Sample:  Entrepreneurship  Fosis  2012  Program  Beneficiaries  (YES,YEI,  YEII).  Regions:  V,  VII  and  RM.    

§ Time  frame:  between  December  2012  and  May  2013.  

§   Treatment  arms:  The  invitaRon  to  parRcipate  was  randomized.  o Control  group:    

• No  invitaRon  to  parRcipate.  o Treatment  group:    

• InvitaRon  to  parRcipate.    

Region   Total Evaluation Participants   Initial Month   End Month  

V   976   January 2013   March 2013  

VII   470   December 2012   December 2012  

RM   3.124   January 2013   May 2013  

Total   4.570          Source: self generated with reports FOSIS . Participants of the evaluation includes invited to participate in the program, the reserve group and the control group.  

Dates  and  number  of  evalua>on  par>cipants  by  region  

EVALUATION  DESIGN  

EVALUATION  DESIGN  

§ Impact   variables:   level   of   formal   debt   of   individuals   and   access   to   formal  credit.  (Only  variables  available  in  administraRve  data)  

§ Hypothesis:    o Rate  credit  reducRon.    o Debt  level,  two  opposing  effect.  o Be]er  credit  condiRons.  

EVALUATION  DESIGN  § Using  administraRve  data:  from  the  Superintendency  of  Banks  and  Financial  InsRtuRons  (SBIF)  and  FOSIS.    § SBIF  Data:  from  January  2012  to  August  2013.    

• Credit  requested  with  informaRon  about  interest  rate,  amount  and  term  in  months.    

• The  average  debt  and  the  credit  unions  unpaid  debts.  • Bank  debt  and  average  unpaid  debts  separated  by  type:  commercial,  consumer  and  mortgage.    

§ With  Financial  Household  Survey  (EFH),  the  appropriateness  of  using  SBIF  data  for  the  evaluaRon  is  analyzed:    • 23.8%  of  households  with  the  lowest  income  (1  quinRle)  have  data  that  might  be  found  in  SBIF.    

• 64.9%  of  total  debt  corresponds  to  a  formal  debt.    

EVALUATION  DESIGN  § FOSIS  data:    

• PAM  debts  and  the  insRtuRon  requested  (the  most  common  Fondo  Esperanza  FoundaRon).    

• Rates  and  subsidies  amount.    

• InformaRon   about   entrepreneurship:   economic   acRvity,   formalizaRon,   sales   levels,   among  others.    

§ The   crossing  with   FOSIS   data   allows   to   know   how  many   individuals   applied   for  funding  through  PAM:    

• Between  March   2012   and   December   2013,   408   parRcipants   have   requested   funding   through  PAM,  with  a  total  of  586  credits.  

EVALUATION  IMPLEMENTATION      Acceptance  rate  of  the  invita>on,  total  and  by  Region  

    V   VII   RM   Total  

Total of Evaluations Participants   976   470   3124   4570  

Invited   446   260   1253   1959  

Trained   153   96   232   481  

Acceptance rate   34.3%   36.9%   18.5%   24.6%  

§  High  regional  variaRon.    §  Given   this   acceptance   rate   and   the   number   of   individuals,   the   minimum  

detectable   size   is   0.34   standard   deviaRons   (with   80%   power   and   5%  significance).  

EMPIRICAL  SPECIFICATION  

§ The  empirical  specificaRon  used  was:  𝒚↓𝒊 =𝜶+𝜷𝑫↓𝒊 +𝜸𝑿↓𝒊 + 𝒖↓𝒊  (𝟏) 𝒚↓𝒕 =𝜶+𝜷𝑫+𝜸𝑿+ 𝒚↓𝒕−𝟏𝟐 +𝒖                              (𝟐)  

Where:  o 𝑦:  The  studied  result  (monthly  level  of  debt,  by  type  of  debt).  o  𝐷↓𝑖 :  Dummy  variable  that  equals  1  if  the  individual  was  invited  to  par>cipate  in  the  workshops  and  0  otherwise.  o 𝑋:  Control  variables(region,  above  or  under  the  50  income  percen>l  ande  age).  o  𝑦↓𝑡−12 :  Monthly  level  of  total  debt/  debt  dummy/  unpaid  debt  dummy,  12  months  before  the  measurment.    

 

§   𝛽  represents  the  impact  of  the  offer  of  parRcipaRon  in  the  program  

RESULTS    

§ No  effect  on  studied  variables  such  as  interest  rate,  commercial  debt  level,  consumpRon  credit,  mortgage  credit,  cooperaRve  debt,  total  debt  and  probability  of  having  debt  or  unpaid  debt three  months  axer  the  treatment  ended.  

§ Similar  results  are  obtained  axer  removing  the  1%  of  higher  debt  levels  (outliers).  

§ AddiRonally,  a  regional  analysis  is  done.    

CONCLUSIONS  

§ No  effect  was  found  over  the  formal  debt  and  the  PAM  credit  taking.  

§ The  low  acceptance  rate  makes  difficult  to  find  an  impact  and  invites  us  to  rethinking  the  program  design.  

§ Effects  in  saving?  

§ The   implementers   and   users   indicate   that   the   topic   has   a   great   relevance  and  the  effort  should  be  conRnued  through  the  FOSIS.  

§ Importance  of  evaluaRon  of  process,  and  impact  evaluaRon.  

GENERAL  CONCLUSIONS  

§   Important  topic  § A  lot  to  be  learned  § Importance  of  process  and  impact  evaluaRon  § Growing  literature  § Consider  the  heterogeneity  of  individuals  and  the  right  treatment  Rmes  

EVALUATING  THE  IMPACT  OF  DELIVERING  CCTS  THROUGH  THE  BANK  AND  FINANCIAL  EDUCATION  

Claudia  Mar<nez  Alvear  Catholic  University  of  Chile  September,  2014