Evans School Policy Analysis & Research Group (EPAR)

In this report, we analyze the evidence that improved and expanded access to financial services can be a pathway out of poverty in Bangladesh and Tanzania. A brief background review of finance and poverty reduction evidence at the country, household, and individual level emphasizes the importance of a functioning financial system and the need to remove individual and household barriers to capital accumulation. We follow with an in-depth literature review on studies that link poverty reduction in Bangladesh or Tanzania with one or more of five financial intervention categories: remittances; government subsidies; conditional and unconditional cash transfers; credit; and combination programs. The resulting empirical evidence from these sources reveal a high share (61%) of positive reported associations between a financial intervention and outcome measure related to our five chosen financial interventions. The remaining studies found insignificant or mixed associations, but very few (3 out of 56) indicate that access to a financial mechanism was associated with worsened poverty. The heterogeneity of study types and interventions makes it difficult to draw conclusions about the efficacy of one intervention over another, and more research is needed on whether such approaches constitute a durable, long-term exit from poverty.

This brief provides a summary of background research for future aid-related EPAR projects. We first review prominent measures of aid, examining the definition and scope of Official Development Assistance (ODA) as well as common criticisms and alternatives to this measurement. We also provide a summary of current research on bilateral and multilateral aid allocation trends. The aid allocation literature broadly concludes that donor countries target aid based on both the needs of recipients and on strategic interests, but that aid allocation criteria differ by donor and by type of aid. Finally, we summarize current aid effectiveness literature and key challenges in exploring the impact of aid. A number of challenges in determining the effectiveness of aid were common in the literature, including the micro-macro paradox, difficulties in identifying causal mechanisms and direction of causality, and data limitations.

This report reviews and summarizes the existing evidence on the impact of access to financial services/products on measures of production, income and wealth, consumption and food security, and resilience for smallholder farmers  and other rural customers and their households in Sub-Saharan Africa. This study covers four main types of financial products/services: 1) credit; 2) savings; 3) insurance; 4) transactional products. We also review the very limited evidence on the effectiveness of bundling these products/services together and of combining them with other offerings such as trainings or support for access to markets, and of providing them via digital channels. We note when financial products/services have been specifically designed to serve the needs of rural customers or smallholder farmers, since the needs of these groups are often very different from those of other stakeholders.

This report reviews approaches to results measurement used by multilateral and bilateral donor organizations and highlights trends and gaps in how donors measure and report on their performance. Our review consists of assessing donor organizations in terms of their institutional design and levels of evaluation for results measurement, their organizational processes for measuring types of results including coordination and alignment with recipients, outputs and implementation, outcomes and impacts, and costs and effectiveness, and their processes for reporting and using results information. We collect evidence on 12 bilateral organizations and 10 multilateral organizations. The evidence review includes multi-country reviews of aid effectiveness, peer reviews by other donor organizations, donor evaluation plans and frameworks, and donor results and reporting documents. The report is based on an accompanying spreadsheet that contains the coded information from the 22 donor organizations. We find that donors report several types of results, but that there are challenges to measuring certain results at the aggregate donor level, due to challenges with funding and coordination for results measurement at the project, country, portfolio, and donor levels. Approaches to results measurement vary across donor organizations. We identify some trends and differences among groups of donors, notably between bilateral and multilateral donors, but overall there are no clear delineations in how donors approach results measurement.