Financial inclusion programs in Ethiopia, Nepal, and the Philippines helped increase resilience. In Ethiopia, savings groups and Sharia-compliant loans helped people cover needs, grow businesses, and invest in assets after shocks. In Nepal, households in a financial inclusion program relied less on negative coping strategies after flooding and recovered faster. In the Philippines, a cash transfer program introduced formal banking, and behavioral nudges promoted savings. However, one-time trainings did little to change financial behaviors long-term. More targeted design could increase resilience impacts on different groups.

1. BUILDING RESILIENCE
THROUGH FINANCIAL
INCLUSION
AT MERCY CORPS
Lessons and Reflections from the Field
OLGA PETRYNIAK
Sr. Director, Global Resilience

2. Increasing Investment Strategies in the
Face of Risk: Ethiopia

3. Shukri Aden built her shop with loans from
a VSLA, Rural Savings and Credit
Cooperative (RuSacco), and the Somali
Microfinance Institute.
• VSLAs through Private Service Providers –
more culturally sensitive models
• Established Microfinance Institutions (SMFI)
in the Somali Region
• Support to Sharia compliant loan
products that drove improved investments
in small businesses and the livestock sector
• Savings groups, coupled with Sharia
compliant loans, helped cover basic needs,
grow small businesses, and invest in
alternative livelihoods or productive assets
to better absorb shocks without selling off
assets.
Increasing Investment Strategies in the
Face of Risk: Ethiopia

4. Resilience Effects:

5. Reducing Exposure to Risk through
Financial Services: Nepal

6. Key Investments
Risk Awareness and Preparedness
Access to risk reducing markets -
sugarcane
Financial inclusion: literacy, emergency
savings
Capacity in improved land management

7. Cost Sharing in Sugarcane
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90228
169297
15700
23280
28570
78267
69677
75150
55020
108425
240308
0
50000
100000
150000
200000
250000
300000
2016 2017 2018
Community/Farmers Private Industry MRED II Government Office

8. August 2017 flooding events affected
Nepal, India, Bangladesh
Post-shock monitoring study of Mercy
Corps “Nexus” approach (market
incentives for DRR) of selected
households similarly affected by flood
M-RED nexus approach v. non-nexus. Nexus
households:
• Reported access to savings at 20% higher rates
• Used savings to respond to flooding 20% more
often
• Relied on fewer negative coping strategies, lost
fewer crops than non-nexus households and
perceived higher levels of ability to recover
Testing Market Incentives on DRR -
Nepal
Once low-income households gain access to credit
or build sufficient savings for risk-mitigating
investments, what is the ultimate impact of these
investments on the household’s experience of
shocks?

9. Responding when a Shock Hits:
Philippines

10. TabangKO - emergency cash
assistance to households
affected by Typhoon Haiyan
Testing Digital Payments and
Behavioral Nudges towards Financial
Inclusion: Philippines

11. TabangKO - emergency cash
assistance to households
affected by Typhoon Haiyan
Introduced formal banking products through a
UCT(Unconditional Cash transfer) program
• Larger transfers were associated with
greater investment in assets
• One-Off Financial Literacy Trainings did not
Influence Financial Behaviors
• Behavioral “Nudges” Can Promote Savings
in a Disaster Recovery Context
• Limited overall effect on digital payment
through financial institutions on long-term
financial inclusion
Testing Digital Payments and
Behavioral Nudges towards Financial
Inclusion: Philippines

12. Outstanding Questions
➢ What conditions, and design features, promote
transition from digital payments to financial
inclusion, post-shock?
➢ What targeted design innovations can increase the
resilience effect of financial products on different
market segments, and increase behavior change?
➢ What policy or regulatory changes can encourage the
design of credit and insurance products that support
more resilient investments?