Policy Target
Mainstream (formal), semi-formal, and informal financial services and products
EVIDENCE-BASED STRATEGY
Initiatives recognize that financial inclusion strategies (i.e., access to formal financial products and services) may have positive and negative impacts on a person’s financial situation, which depends on the structures (i.e., financial products) and institutions (i.e., policies, programs, and services) of the financial sector.
SAMPLE INDICATORS
- Knowledge of the advantages and disadvantages of the formal financial system
- Perceived access to affordable, no-fee financial services and products within the formal financial system (e.g., among disadvantaged people)
EVIDENCE-BASED STRATEGY
Initiatives consider the possible unintended consequences of financial inclusion strategies (i.e., access to formal financial products and services), such as taking on increased debt while building credit or prioritizing saving over emergency or basic needs, which can lead to, for example, the use of quick cash loans or borrowing from family or friends. Initiatives tailor strategies to protect disadvantaged groups who are using formal financial services and products from engaging in risky financial behaviours.
SAMPLE INDICATORS
- Number/percentage of people who asked for an extension for repayment
- Number/percentage of people who failed to repay loan instalments by the deadline
- Number/percentage of people who take loans to repay existing loans
- Perceived level of difficulty to manage debts
EVIDENCE-BASED STRATEGY
Initiatives aim to help identify the most affordable, reliable options with fewer conditions that meet each person’s financial values, needs, and goals through either mainstream banking services or semi-formal and informal financial products and services.
SAMPLE INDICATORS
- Financial confidence levels (e.g., among disadvantaged groups)
- Number/percentage of people who report ease in finding the financial services and products they need within formal, semi-formal, and informal financial systems, that are supportive to their financial security (e.g., stratified by deprivation levels)
EVIDENCE-BASED STRATEGY
Initiatives acknowledge that appropriate and fair semi-formal and informal financial markets (e.g., borrowing from moneylenders and friends) may fit local sociocultural norms and the circumstances of a person’s life. It recognizes that semi-formal and informal (non-exploitive) financial products and services may provide flexibility in terms of transactions and contracts and may offer reliable, free or low-cost options, particularly for people who experience complex needs. These may be viable alternatives for certain groups of people (e.g., those experiencing low-income) to achieve financial wellbeing.
SAMPLE INDICATORS
- Availability and accessibility of accurate and relevant information about semi-formal and informal financial services, products, and practices
- Number/percentage of people reporting confidence in assessing the advantages and disadvantages of the non-mainstream banking system (e.g., among disadvantaged groups)
- Number/percentage of disadvantaged people reporting that reliable semi-formal or informal financial services and products better meet their needs
- Availability and perceived accessibility of mechanisms for people to report abusive and exploitation financial practices and obtain timely redress