Yale and Other Researchers Explore Banking Access for the Poor

Researchers at Yale, Harvard, New York University and Innovations for Poverty Action will collaborate on a five-year Financial Access Initiative, funded by a $5 million grant from the Bill & Melinda Gates Foundation to improve access to financial information and loans for low-income individuals in developing countries.

Anecdotal success stories about microfinance are well known; substantive research on how to increase and improve global financial access is still lacking. This grant will enable experts to assess existing research, generate new evidence through fieldwork and inform regulatory policy.

“As donors in this space, it is critical that we make decisions informed by sound research,” said Bob Christen, director of Financial Services for the Poor at the Bill & Melinda Gates Foundation. “We hope that the Financial Access Initiative will yield data, analysis and research that decision-makers need to deliver financial services that markedly advance the wellbeing of the poor.”

One of the biggest hurdles to opening up financial sectors to those living in poverty is a lack of hard data and analysis about how poor households manage their finances and cope with risk: which financial products do the poor use and why, who has access to what, at what cost and where. The impact of regulation and government policy on the broad availability of finance is still badly understood. Most fundamentally, despite the anecdotes, rigorous evidence is lacking on the economic and social impacts of different interventions and policies.

Under the direction of Principal Investigator Jonathan Morduch, professor at New York University, the Initiative is based at NYU’s Robert F. Wagner Graduate School of Public Service and is co-directed by professors of economics Sendhil Mullainathan of Harvard and Dean Karlan of Yale. Christina Barrineau, who formerly headed the International Year of Microcredit for the United Nations, will lead the Initiative as Managing Director.

Field research will be coordinated by Innovations for Poverty Action, an organization based in New Haven, Connecticut, and headed by Karlan, assistant professor of economics at Yale.

The research will build on studies with existing microfinance partners in a dozen countries including Mexico, Peru, India, Pakistan, Ghana and the Philippines. The Initiative is also developing new collaborative relationships to broaden the potential of the research and dissemination of findings.