Vulnerability, risk management and overindebtedness
Innovation:
Financiera Confianza implemented a combination of financial and non-financial services. The innovation consisted of risk management training for clients as well as a voluntary multi-risk insurance product both of which were to help clients protect against unforeseen expenses.
Results:
Some positive impact on multiple borrowing/overindebtedness
28% lower outstanding loan balances, and number of other financial service providers used
Positive income effect of 450-500 Soles (170-190 USD)
No impact of financial education on insurance uptake (not significant)
Counter-intuitive results:
Significant negative impact vulnerability as fewer clients can meet unexpected expenses (36%) and cover monthly costs (21%)
Increase of late payments by 12% (over-indebtdness)
Significant negative impact on attitude towards savings for emergencies (25%)
