Are Financial Capability Interventions Effective? a Systematic Review

Background: There is growing academic and public policy interest in helping people gain financial capability. Practitioners and researchers are testing financial capability interventions with adults, children, immigrant populations, and other groups (e.g., Theodos et al., 2015; Batty, Collins & Odders-White, 2015; Huang, Yunju, & Sherraden, 2013). These interventions aim to increase financial knowledge through financial education combined with financial access (i.e., financial product or service). The interventions differ in their methods of both increasing financial knowledge and financial access and their method for combining them. While the evidence for financial capability interventions is growing and pointing to positive effects, the overall effects are largely unknown. The purpose of this systematic review was to examine and synthesize the evidence of financial capability interventions across various methods of delivery and outcomes to inform practice and policy.

Methods: Systematic review procedures were used to examine effects of financial capability interventions on six different outcomes for participants relative to non-participants. This review focuses on financial capability interventions that link a financial product or service with financial education. A comprehensive and systematic search was undertaken to locate published and unpublished randomized or quasi-experimental prospective studies conducted through 2017. A review of 18,187 titles and abstracts was conducted, and 313 reports were retrieved and proceeded to eligibility screening. Two coders independently screened studies and extracted data from included studies. Descriptive analysis was conducted to examine and describe characteristics of included studies including risk of bias. 

Results: Forty-eight reports met inclusion criteria for this review. 13 of these were deemed duplicate or summary reports and 35 of the reports reported results from 16 unique studies. Of the 16, five were large, longitudinal studies that were reported on in 24 sub-studies, and 11 were unique studies with no sub-studies. The majority of the studies (63%) were randomized control trials (RCTs). Only one study used a manualized protocol.

Studies reported on six different intervention types: 1) child education savings accounts; 2) matched savings accounts; 3) retirement accounts; 4) bank accounts; 5) credit counseling; 6) homeownership education. Outcomes studied related to four types of behavior changes (account opening, retirement saving rate, saving rate, and budgeting) and four types of financial outcomes (saving amount, debt amount, asset value, and credit score). The most frequent behavior change outcome studied was account opening (36%), and the most frequent financial outcome studied was savings amount (64%).

Discussion: Most of the evidence results from relatively few studies, and a small number of financial outcomes are reported. Given the relatively few outcomes reported, the evidence from this review urges caution in the enthusiasm for, and widespread adoption of, financial capability interventions. More rigorous evidence is needed on the effectiveness of the intervention using strong methodology and structured/manualized protocol. Scholars should examine the merits of developing core outcomes to be measured across financial capability interventions.