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).
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Editors’ Note: Hi, Laura and Jonathan here. A few of the pieces this week come from people who spent years up close with how poor households actually handle money, and keep coming back with something more tangled than the story usually told, and more persistent. Tim will be back for the next edition. - Laura Freschi and Jonathan Morduch
The idea for this conversation was born from alarm. At the news that the US Treasury Secretary and the Chair of the Federal Reserve had called a meeting with the CEOs of the twenty largest banks in America to talk about threats to the financial system from emerging frontier AI models, Tim had questions: what about the community banks, the credit unions, and the CDFIs—the financial institutions that serve low-income communities and small businesses in America? When will they be invited to the meetings on how to defend their systems against AIs that can exploit software vulnerabilities with unprecedented ease and speed? And globally, are the regulators in middle-income and developing countries also holding meetings to discuss how they can defend against these threats? Will those meetings include anyone beyond the largest banks?
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Editor's Note:
If you were hoping that the faiV would be a pleasant distraction from the overwhelming flow of AI-related content, sorry. For the record, the faiV had “ai” built in before Anthropic existed. And a housekeeping note: we’ve finally jumped ship from Mailchimp to NYU’s mailing platform—I guess if you’re reading this it’s been a seamless transition and if you’re not, well, you’re not. Feedback on the faiV’s content and format and delivery methods is always welcome, just drop me an email.
- Tim Ogden