Activating Women Cognitive Abilities: Impact of a Financial Literacy Pilot Program in India

Abstract

This study is based on a randomized control trial (RCT) aimed at understanding the effectiveness of a financial literacy pilot program conducted in 2014-2016 at the Institute for Indian Mother and Child, a non-profit micro-finance institution based near Kolkata. Significant impacts are revealed in terms of improvements in saving accumulation and punctuality in the repayment of the loan installments for borrowers belonging to the treated group, compared to the group of borrowers who did not participated to the program. In particular, positive contribution emerges from the evolution of both the cognitive skills and the level of financial knowledge developed by the beneficiaries during the training program. Estimates provide evidence that enhancing cognitive abilities turn out to be strongly beneficial in fostering the accumulation savings, whereas financial principles also had an (although weaker) impact on stimulating a more timely reimbursement of the installments. We conclude that the financial literacy pilot program has significantly activated women cognitive abilities, giving them the opportunity to apply them both in the course and in their businesses.

Keywords: microfinance; financial literacy; randomized control trial, repayment performance; savings

JEL Classification: I21, I24, I28, J13, J24