Do financial management tools improve
credit access among
disadvantaged sectors?
Evidence from the use of an Integrated Platform for
Company Management (PIMEX )
.Andrés Cuba Borda
.Sharim Ribera Camacho
Center for the Studies of Social and Economic Realities
Washington DC, November, 2014
BACKGROUND
• Bolivia has made substantial progress in increasing
financial services over the last decade
BACKGROUND
 The increase in coverage benefited all departments in Bolivia
MOTIVATION
 We found there is greater inclusion with respect to savings
than to credit
 Why? Due to the lack of financial understanding of the credit
application process
MOTIVATION
 How can this be improved?
 Overall financial education
 Financial capability and management
 Assessment for credit applications.
 We cover all three
RESEARCH QUESTION
 Do financial management tools improve
access among disadvantaged sectors?
credit
METHODOLOGY AND FIELD EXPERIMENT
1. Identify potential borrowers / credit beneficiaries
2. Conduct baseline survey
3. Small scale field experiment
4. Comparison of results
METHODOLOGY: BASELINE SURVEY
 We conducted a baseline survey to all 110 potential
borrowers
 Socio demographic profiles
 Administration of expenses to measure Financial Management
(FM)
 Savings practices and behavior
 Credit access and credit use
 Use and access to other channels for Financial Exposure (FE)
 Greater FE is related to financial education
METHODOLOGY: FIELD EXPERIMENT
THE TREATMENT GROUP
 50% randomly selected as part of a “treatment group”

We give them a short induction on financial education



Training on the PIMEX tool



Basic notions of financial terminology
Use of a financial calculator and budgeting
Three hour session for groups of 10-15 people on how to use PIMEX
We have run the first session, three more to come…
Elaboration of credit application



Use a credit-assessment tool to generate list of legal requirements
Use
PIMEX
to
produce
information
on
income/revenue,
expenses/costs, cash flow
Preparation of credit application file
METHODOLOGY: FIELD EXPERIMENT
THE CONTROL GROUP
 50% will be part of a regular “control group”
 We only collect baseline information with our initial survey
 No additional training is provided
 Keep track of their credit application with help of loan officers from
ECOFUTURO AND BCO
 MONITORING



We check on the status of application of the control group with the
loan officer every week
We do not contact the applicants anymore after the initial survey
Credit officers do not know which individuals are from the control
or treatment group
DATA COLLECTION
 Three sources of data for this project
1. Regional Forum Survey

Measure overall financial inclusion indicators in three main
metropolitan areas
2. Baseline Financial Inclusion Survey

Applied to control and treatment groups
3. Personalized financial assessment reports (Pimex Relev)
FINANCIAL TRAINING SESSIONS FOR TG
(FIELD EXPERIMENT)
 Main content of the sessions included:
1.
Financial Education
2.
Financial and Business Management (Pimex Relev)
3.
Orientation and assessment on accessing credit.
THE FINANCIAL MANAGEMENT TOOL
(PIMEX RELEV)
 The PIMEX Tools produces the following outputs
1. Total units sold
2. Total amount generated per unit sold
3. Total income per product
4. Total income
5. Average sale prices
6. Profit margins
7. Product/ser vice destination
8. Product Inventory Report
9. Packaging Inventory Report
10. Stock report
 Use (1) – (10) to generate two reports:
1. Monthly income report + detail of production+
2. Fix and variable costs + monthly financial flow
CREDIT
EVALUATION
BASELINE SURVEY RESULTS
(SOCIO DEMOGRAPHIC PROFILE)
BASELINE SURVEY RESULTS
( S AV I N G S B E H AV I O R )
BASELINE SURVEY RESULTS
( C R E D I T B E H AV I O R )
CONCLUSIONS
How does t he result connect with t he broader objective ?
 There is an interesting and increasing use and demand for financial
ser vices in Bolivia
 The formal financial system has been expanding their financial
ser vices, which is reflected in a greater number of credit approvals and
lower rates of credit dismissals
 However, there is an over whelming number of small entrepreneur s that
DO NOT ask for credit
 We have designed an experiment to evaluate the impor tance of
financial management tools to increase credit access
 We implemented two sur veys.
 One to document financial inclusion in main metropolitan areas in Bolivia
 Baseline survey about financial inclusion including savings and credit behavior
 We are currently working on implementing the second, third and four th
rounds to administer the PIMEX
 Hopefully interesting results from the experiment for next time…
THANKS!