Markets for consumer financial services are growing rapidly in low and middle income countries and being transformed by digital technologies and platforms. With growth and change come concerns about protecting consumers from firm exploitation due to imperfect information and contracting as well as from their own decision-making limitations. We seek to bridge regulator and academic perspectives on these underlying sources of harm and five potential problems that can result: high and hidden prices, overindebtedness, post-contract exploitation, fraud, and discrimination. These potential problems span product markets old and new, and could impact micro- and macroeconomies alike. Yet there is little consensus on how to define, diagnose, or treat them. Evidence-based consumer financial protection will require substantial advances in theory and especially empirics, and we outline key areas for future research.
Read the working paper here.
Encouraging citizens to apply pressure on underperforming service providers has emerged in recent years as a prominent response to the failure of states to provide needed services. We outline three theoretical mechanisms through which bottom-up citizen-oriented pressure campaigns may affect development outcomes and investigate them via a large-scale field experiment in the Ugandan health sector. While we find modest positive impacts on treatment quality and patient satisfaction, we find no effects on utilization rates, child mortality, or other health outcomes. We also find no evidence that citizens increased their monitoring or sanctioning of health workers. Our findings, therefore, cast doubt on the power of outside actors to generate bottom-up pressure by citizens or improvements in development outcomes. Held up against the findings of other, similar studies, our results point to the salience of mechanisms other than citizen pressure for improvements in service delivery, and to the importance of baseline health conditions for the success of bottom-up, citizen-oriented pressure campaigns. Such conditions shape outcomes both across countries and within countries over time, with the latter finding holding important implications for countries undergoing rapid socioeconomic change.
Helping the ultra-poor develop sustainable livelihoods is a global priority, but policymakers, practitioners, and funders are faced with competing ideas about the best way to reduce extreme poverty. Innovations for Poverty Action conducted a randomized evaluation to test the impacts of diverse components and variants of the Village Enterprise microenterprise program, an integrated poverty alleviation intervention that provides poor households with a combination of cash transfers, mentorship, business training, and support with the formation of savings groups, over a one-year period.
- Village Enterprise’s microenterprise development program led to increased consumption, assets, and income, as well as improvements in nutrition and subjective well-being.
- Cost-effectiveness appears high: researchers estimate a full cost recovery within three to four years.
- A cost-equivalent cash transfer appeared to have less promising medium-term impacts on poverty reduction and subjective well-being than the microenterprise program, though estimates are more ambiguous.
- Adding a light-touch behavior change component to the cash transfer changed the investment patterns of cash transfer recipients and improved subjective well-being somewhat, but cannot be characterized as a substitute for the much more heavy-touch training and mentorship interventions of the microenterprise program.
- Overall, the results suggest that training and mentorship components of integrated poverty alleviation programs are sensible and cannot simply be removed (or substituted for cash transfers). But as they are complex, more research is needed on the issue of scaling them while maintaining their quality.
Uganda has made substantial advancements in nancial consumer protection policy in recent years but understanding whether and how the nancial sector complies with these new regulations can be a challenge in the absence of systematic monitoring. Setting rules is insufficient to ensure proper market conduct, so supervision of sales visits is needed to ensure that the rules established are upheld in practice. To provide a snapshot of current practices and compliance with existing guidelines on consumer credit information provision at the point of sale, Innovations for Poverty Action (IPA) conducted a “mystery shopping” exercise of lending institutions in three districts of Uganda. For this survey, a mystery shopper posed as a regular customer and, unannounced, visited lenders in order to discover information about the loan application process without the credit officer knowing they are being observed, and thus avoiding impacting their normal behavior or practices.
Global efforts are underway to improve education quality—to ensure children are not only in school but learning and developing to their full potential. Although many theories exist on the best approaches to improve education quality, policymakers and implementers need evidence on which programs are effective at helping children actually learn while in school. Innovations for Poverty Action (IPA) is a research and policy nonprofit that discovers and advances what works to reduce poverty and improve lives. In addition to conducting rigorous research, IPA reviews and consolidates research for policymakers and practitioners. The objective is to distill complex, nuanced, and dynamic research findings into focused and actionable recommendations. This brief summarizes and provides key lessons from multiple meta-analyses and over two-dozen randomized evaluations (both IPA and non-IPA studies) on improving learning outcomes in low-income countries, with a focus on basic education.
Globally, violence against women is a leading cause of premature death and morbidity for women and almost one-third of women report experiencing intimate partner violence (IPV) or sexual violence by a non-partner at some point in their life. Yet rigorous evidence on scalable and effective ways to reduce IPV is limited, in part because measuring IPV is challenging. Current standards of practice for reducing gender-based violence are also relatively limited in scope, focusing mainly on changing gender norms. Designing and testing new approaches has the potential to yield more effective solutions. IPA’s Intimate Partner Violence Initiative, a partnership with the International Rescue Committee, exists to address these challenges. The initiative designs and tests innovative solutions to IPV, leverages existing research to identify factors that contribute to IPV and works to address methodological and measurement challenges in violence research and related fields. With our academic and implementing partners, IPA has identified a number of effective solutions, including mass media campaigns, coupling women’s economic empowerment with gender dialogue, and teaching secondary school students soft skills. Results from several initiative-supported studies are forthcoming. Further research will be needed to validate results in new contexts and at scale, and to design and evaluate new ideas.