Little research has explored the potential for mobile technology, and mobile money specifically, to improve the lives of the poor. In Kenya, where a widely-used mobile–based money transfer service, M-PESA, has dramatically reduced the cost of sending money across large distances, researchers evaluated the impact of the service on households’ ability to weather negative income shocks, such as illness or agricultural losses.
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Pension systems aim to prevent poverty among the elderly and to help ensure people have adequate income across their lifetime. But, only a small proportion (25 percent) of the global labor force contributes or accrues pension funds, and in developing countries essentially no small firms’ employees have pension coverage.

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In places with limited formal institutions, social and family networks play an important role in people’s lives, with friends and relations often sharing financial resources. The social norm which requires resources be shared may reduce incentives to work, with negative economic consequences.

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Recent evidence suggests formal savings accounts can lead to increased savings for the poor, but uptake of bank accounts has been low. There is also evidence suggesting that savings for specific goals can potentially be increased by enabling people to commit money towards goal-specific “mental accounts”.

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When children do not receive adequate nourishment in the first years of life, it can impair their physical and cognitive development and have long-term consequences on their earnings and productivity. In Myanmar, which has one of the highest rates of stunting in the Asia-Pacific region, Innovations for Poverty Action is working with researchers to evaluate the impact of maternal cash transfers and nutritional information on child malnutrition.

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Despite the initial promise of microcredit, randomized evaluations have found at best modest effects of microloans on poverty. Digitized payments from government cash transfer programs provide a unique opportunity to offer microcredit while addressing some of its shortcomings, potentially reducing interest rates, default risk, and repayment issues.

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There are an estimated 411 million mobile money accounts worldwide, allowing even the poor in remote areas to send and receive money at low cost. How access to this financial tool affects long-term financial well-being, however, is not well understood. In Kenya, IPA worked with researchers to track the economic progress of households as the M-PESA mobile money service expanded over six years.

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Numerous developing country governments, such as Brazil and Mexico, have adopted conditional cash transfer (CCT) programs as a social safety net, providing billions of dollars in transferred funds to millions of low-income citizens, in many cases by depositing them directly into a bank account. However, most of these recipients have little to no previous experience with formal financial products, thus providing the opportunity for product-linked training.

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Many microentrepreneurs in developing countries may lack the training or skills to make the most effective financial and business management decisions. In India, researchers tested a  low-cost and easy-to-scale financial capability intervention that delivered easy-to-remember and easy-to-adopt rules of thumb via voice-based mobile phone messages.

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An IPA surveyor interviews a microfinance borrower in the Philippines

Although the success of microcredit was originally attributed to the group loan model, there is little evidence on the relative impacts of individual lending versus group lending on household consumption, income, and enterprise creation. In this study, researchers randomly selected existing group-lending centers to convert to an individual liability model.

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IPA surveyors interview loan borrowers in Ghana

Microcredit has been successful in bringing formal financial services to the poor, but given that many microcredit clients live in poverty, this success has sparked a debate surrounding the question of how to set interest rates. In Ghana, researchers set out to measure how different interest rates on individual loans affect demand for the loans and if and how different interest rates affect borrower profile.

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Lack of access to finance constrains small business growth—a problem that is exacerbated for Muslim business-owners, many of whom do not take out traditional loans for religious reasons. Innovations for Poverty Action is supporting research in Pakistan on a lease-based product that features more flexible repayment schedules, allows businesses to share risk with a large microfinance institution, and complies with local Islamic financial norms.

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A sugar cane farm in Kenya

Farming is risky: a drought, bad harvest, or dip in crop prices can leave small farmers in developing countries without much-needed income. Attempts to mitigate these risks with agricultural insurance have typically been unsuccessful because farmers have chosen not to buy insurance. Researchers partnered with a large sugar cane company to see if delaying the premium payment until after the harvest would increase farmers’ demand for insurance.

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Advances in payments technology have the potential to improve the efficiency of slow and corrupt public welfare programs. Researchers tested how Smartcards, which coupled electronic transfers with biometric authentication, affected the functioning of two government welfare schemes in India. They found that even though the new Smartcard system was not fully implemented, it resulted in a faster and less corrupt payments process without adversely affecting program access.

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Savings on a Mobile Money Platform in Afghanistan

Behavioral research suggests that self-control, procrastination, attention, and other behavioral factors may limit individuals’ ability to save for the long-term. New mobile money platforms in many developing countries are creating financial products that can help low- and moderate-income individuals overcome these barriers.

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