Household economic strengthening through financial and psychosocial programming: Evidence from a field experiment in South Africa

• Published in: Journal of development economics 2018-09, Vol.134, p.443-466
• Main Authors: Steinert, Janina Isabel, Cluver, Lucie Dale, Meinck, Franziska, Doubt, Jenny, Vollmer, Sebastian
• Format: Article
• Language: English
• Subjects: Financial literacy; Parenting; RCT; Saving; South Africa
• ISSN: 0304-3878; 1872-6089
• DOI: 10.1016/j.jdeveco.2018.06.016

Using data from a randomized field experiment with 552 households, nested within 40 villages and townships in South Africa, we examine the impact of a brief financial literacy training that was integrated into a broader psychosocial parenting intervention. Based on self-reported measures, we document significant improvements in financial behaviors, including higher saving and lower borrowing rates. We also see wider implications for household economic welfare, demonstrated by reduced self-reported financial distress, better resilience to economic shocks, and a greater capacity to securing basic needs. We argue that program impact may run through three effect channels, namely improved self-efficacy, higher family and community social support, and greater optimism. Overall, our findings suggest that “hybrid” program curricula that offer combinations of financial and psychosocial components can add value to stand-alone financial literacy training. •An RCT of a financial literacy and parenting program was conducted in South Africa.•Self-reported saving and financial self-efficacy increased and borrowing rates reduced.•Financial distress and concerns decreased and access to basic needs improved.•Program impact was facilitated by increased self-efficacy, social support, and optimism.•Psychosocial program components can add value to financial training curricula.