Product Design for the Poor: Emergency (Hand) Loan

A growing body of research on the economic lives of the poor in developing countries emphasizes that the already difficult task of making do on a few dollars a day is made harder still by the unpredictability and variability of poor peoples’ incomes. Thus, it comes as no surprise that emergencies can derail families and prevent them from getting ahead. The Financial Access Initiative, ideas42 and the International Finance Corporationrecently released a product case study on this problem, which focuses on the design, implementation, and results of a pilot emergency (“hand”) loan product in India. The product achieved its original intent, but the pilot encountered considerable institutional and execution challenges. The experience generated lessons for future product innovation. It’s a fascinating case study that underscores the value of behavioral economics in helping us shape programs and products. Read the new paper: Emergency (Hand) Loan (March 2011).