Responsible microfinance bundling: Experimental evidence on separating insurance and credit offers.

摘要

In recent years combining multiple financial products into one package in a process known as bundling has become more common among microfinance institutions (MFIs). While bundling can be beneficial to MFIs by cutting costs and providing protection from client default, the implications for MFI customers are less clear. Bundling the products may take advantage of the existing relationship between the financial institution and the client to expand microinsurance access and take-up, but alternatively offering too many products could lead to low client understanding and thus low take-up of the product. We conducted a randomized field experiment to determine if separating the offer of crop insurance from the loan application would result in increased rates of take-up, coverage amounts and understanding amongst potential clients in Colombia. Individuals in the control group received a voluntary, bundled credit/insurance offer at the time they were applying for a loan, while individuals in the treatment group received a separated offer for the same insurance product several weeks after the loan application process was complete. Separating the insurance offer did not have a statistically significant effect on take-up rates, coverage amounts or product understanding. These findings suggest that the voluntary bundling of microfinance products is a valid approach to expanding outreach and increasing financial access that benefits both providers and clients. Measures of product understanding are low, however, in both the bundled and separate offer groups, which indicates a need for responsible bundling with strong consumer protection.