Vulnerability, risk management and overindebtedness
Innovation:
Financial Services: Individual Emergency Fund (emergency savings)
Introduction of the Individual Emergency Fund (IEF). The IEF is an emergency savings account that can be augmented by voluntary contributions as well as a 10% interest rate rebate automatically credited upon punctual loan repayment. The savings balance can be used for meeting emergency expenses thus preventing additional debt or bringing about a consumption smoothing effect.
Results:
Strongest results: positive impact on over-indebtedness/multiple borrowing,
Cross-borrowing decreased in multiple indicators: 22% reduction in taking out loan to repay another, 7% reduction in borrowing from formal and 1.5% from informal sources
Repayment difficulties decreased by 7%
Improvement of precaution-related financial attitudes
Inconclusive results:
Financial behaviour/risk management
Vulnerability: while study shows significant increase in ability to cover all household expenses (4.2%), it also finds a decrease in the ability to cover unforeseen household expenses
Negative result:
Clients took less insurance, e.g. decrease of >30% in life insurance (negative impact on asset building))
