The concept of financial health is rapidly emerging as a crucial metric for financial inclusion. Over the last few years, there has emerged a call to look beyond the straightforward and easily measured access and usage metrics of financial products to gauge their impact on users’ lives as measured by their financial health or resilience. To measure the financial health of low-income households, this survey tool applies an input–output–outcome framework which can identify gaps that remain unaddressed by existing financial products.
In partnership with PricewaterhouseCoopers, we have deployed the tool across a sample of 4,000 low-income households in seven Indian states. The 20-minute survey captures ownership of a broad suite of financial products (inputs), along with the frequency and depth of their usage (outputs). It also provides a product-agnostic measure of household financial health (outcomes), defined here as the ability of low-income households to manage cashflows effectively and withstand contingencies. This framework enables the identification of gaps in both access and usage across financial product categories, differences in uptake and engagement across demographic and livelihood cohorts, and aspects of financial resilience that remain underserved by formal financial services.
The survey’s insights can be applied by multiple stakeholders: (i) financial service providers can use it for market reconnaissance and opportunity discovery, (ii) regulators can use it to monitor the effectiveness and impact of financial inclusion efforts, and (iii) implementation agencies can use it as a targeted needs-assessment tool.
