Delivering Financial Services to the Poor: Constraints on Access Take-Up, and Usage

Abstract

A majority of the world’s poor lack access to basic financial services, leaving them with limited economic capabilities. Improving financial inclusion brings many challenges due to friction-driven constraints on service delivery and social and behavioral constraints on usage. This dissertation examines three innovations designed to improve the efficiency of delivering financial services to the poor. The first chapter investigates the effects of digitizing group microfinance transactions using a field experiment in rural Philippines. The intervention reduced savings by 20% among existing microfinance members. Much of these effects are driven by weakened group cohesion and sensitivity to transaction fees, highlighting the potential importance of interactions between technology and the social environment. The second chapter evaluates the impact of a partial credit subsidy program— a policy widely used to improve credit access among small enterprises—in Indonesia using a difference-in-difference framework. While the program expanded the usage of formal credit to 1.9% of the households nationwide that would otherwise not have received formal credit, I find no short-term effect on enterprise activities. The third chapter uses a field experiment to examine take-up and usage of a social health insurance scheme among Filipino microcredit borrowers. I find strong evidence for the co-presence of adverse and advantageous selection. Despite higher insurance coverage two years later, the intervention did not increase insurance utilization.