This presentation by Beniamino Savonitto was made during session 3 at the High-level Conference on Global and European Trends in Financial Education held on 22-23 May 2014 in Istanbul, which explored the role(s) of the private and not-for-profit sectors in financial education, financial literacy and innovation for young people and financial education for migrant workers and their families. Find out more at http://www.oecd.org/daf/fin/financial-education/2014-conference-global-european-trends-financial-education.htm

1. Improving Financial Capability
for Migrant Workers
and their Families
A Review of the Evidence
Beniamino Savonitto
Global Financial Inclusion Initiative
Innovations for Poverty Action
High-level conference on
global and European
trends in financial
education
22-23 May 2014 -
Istanbul, Turkey

2. International Remittances
• Expecting $436 billion this year (WB 2014)
• Harness remittances for development goals?
• evidence on impact of migration on development
mixed & difficult to measure
• Significant portion of household income
• both on the migrant side and on the recipient side

3. Are migrants and their families taking
healthy/optimal financial decisions? Are they
under-remitting or undersaving … compared to a
world with perfect markets and fully attentive,
rational and consistent decision-making
Financial Capability
Are migrants and their families taking optimal
financial decisions? Or are they under-remitting or
undersaving?
Many barriers that may lead to suboptimal
behavior:
• Financial illiteracy and lack of information
• Transaction costs
• Behavioral barriers
• Transnational household dynamics

4. IPA’s Approach
• Look for solutions to poverty problems
• Generate insights on what works and what does
not through randomized evaluations
How have the lives of individuals changed,
compared to how they would have changed, in the
absence of the program?

5. IPA’s Approach
• Replicate these tests with different partners in
different contexts
• Ensure that those findings are useful to, and used
by, practitioners and policy makers
IPA has over 400 completed and ongoing studies
around the world in finance, SME, health, agriculture,
education and governance

6. Barriers
• Financial illiteracy and lack of information
• Transaction costs
• Behavioral barriers
• Transnational household dynamics

7. Financial Illiteracy
• Evidence on impacts of financial education for
adults are mixed (Xu and Zia 2012, Miller et al. 2014)
• Findings from early research on migrants.
Training for Migrants in Qatar (Seshan and Yang 2014)
5-hour motivational workshop on savings and joint decision-making
+ savings and remittances for migrants with lower prior
savings levels
+ joint decisions on financial plans
+ wife’s financial practices

8. Financial Illiteracy
Training Families in Indonesia (Doi, McKenzie and Zia - 2012)
pre-migration workshops (2 day for migrants, 2 half-days for family) on
financial planning & management, savings, debt management, use of
remittances, insurance
Only migrant
= awareness
= knowledge
= behavior
= savings
Just family or both
+ awareness
+ knowledge
+ behavior
+ savings (both only)
Training Migrants in Singapore (Barua, Shastry and Yang - prelim)
27 hour training over 9 months on savings and control over savings and remittances
= knowledge
= behavior
+ some increase in control

9. Information Sessions in the Pacific (Gibson, McKenzie andZia
2012)
2 hrs on cost of remittance methods
+ knowledge (for groups with less knowledge and experience)
= behavior (switching providers)
= remittance levels
Lack of Information

10. Reducing Costs in El Salvador (Aycinena, Martinez and Yang
2010)
Price discount on remittances from $9 to $8, $7, $6, $5, $4
$1 reduction  $25 increase in remittances
No evidence of crowd-out; increased frequency
Transaction Costs

11. To tackle behavioral barriers and help with transnational
household dynamics.
Savings Accounts in El Salvador (Ashraf,Aycinena, Martinez,Yang
2013)
Offer/Assistance to open savings accounts for family, migrant, or migrant and
joint
+ savings in joint account
No evidence of crowd-out of other savings
= Remittance levels
Better Products
Edupay in Italy (De Arcangelis et al. – prelim)
Pilot of a direct payment of school fees or ability to send ‘labeled’ remittances
+ substantial increase in education investment
+ direct payment only marginally better than label

12. Conclusion
Body of evidence is still quite small:
• Encouraging results from financial education
• Many barriers at play
• Importance of thinking about transnational households
• Improvement of financial capability will likely come
from a variety of interventions and product
improvements
Thank you
bsavonitto@poverty-action.org
www.poverty-action.org/financialinclusion