By Misha Sharma, Dvara Research
The Household Finance Research Initiative at Dvara Research is delighted to announce the call for research proposal on key themes and issues pertaining to Household Finance in India. We are announcing this initiative in collaboration with a diverse group of partners- Northern Arc Capital, Robert Bosch Centre for Data Science and Artificial Intelligence (RBCDSAI) at IIT-Madras and Omidyar Network.
The key motivation for research in the field of Household Finance in the Indian context largely emerges from the current state of financial inclusion in India. While account ownership at a financial institution has surged from 35 percent in 2011 to 80 percent in 2017, the Indian financial sector, in its current form, largely remains inadequate in meeting the financial requirements of Indian households, particularly, low-income households. Firstly, the financial sector for this segment is characterised by under penetration of a suite of financial products such as credit, savings, investment, retirement and insurance product. Secondly, ‘access’ to bank accounts, considered as the gateway to a suite of financial products and services, has not necessarily translated into ‘usage’, reflecting market inefficiencies. Thirdly, substantial issues exist with the design and distribution channel of financial products and services that fail to service the last mile consumer and meet the unique requirements of low-income households, further excluding them from the formal financial system. Finally, gaps exist in the regulation of the financial sector, leading to consumer harm on the one hand and stifling competition and innovation on the other, leading to inefficient household outcomes.
Research in Household Finance allows us to unearth each of these facets, as it encompasses the various actors relevant to households’ financial decision making. As Campbell (2006) in his presidential address noted, Household Finance asks how households use financial instruments to attain their objectives. However, households do not operate in isolation. There are multiple factors that influence households’ decision making. Therefore, the field of Household Finance Research in addition to understanding households’ financial choices and strategies, also seeks to understand how institutions provide goods and services to satisfy the financial function of households and how regulatory and government action affects the provision of financial services (Tufano, 2009).
The policy push to universalise access to financial services is undoubtedly imperative, given its links to increasing well-being, building resilience and building opportunities. However, Indian financial inclusion policy has primarily focused on supply-side initiatives, employing either mandates, channel regulations or standardized product design to deliver incremental supply. There is little emphasis or attempt to understand the demand side aspects such as the specific financial requirements, financial circumstances, risk appetite and risk capacity of Indian households. This has led to a gap in our understanding of Indian households’ financial behaviour and the challenges they face in accessing and using formal financial services. Additionally, the data on Indian households and their financial behaviour, preferences and choices remain very thin and further creates a void leading to decisions (by practitioners and policymakers) based on inadequate evidence.
Given this context and recognising the paucity of research and data in the field of Household Finance, this initiative aims to generate high-quality evidence-based research under the themes of household finance and build a robust body of work that will educate, encourage and facilitate policymakers and practitioners to address the gaps in existing financial products and services targeted towards low-income households.
In line with the current state of Household Finance in India, we invite research proposals under three broad research themes. The first theme looks at understanding the financial decisions that households make to meet their life-cycle objectives, the second theme looks at understanding the factors responsible for household financial behaviour and its impact in shaping household outcomes and the third theme looks to understand how the provision of financial services impacts the financial, economic and social outcomes of households. Research emerging from this initiative will be disseminated at the Household Finance Conference hosted by Dvara Research, scheduled for April 2021.
We invite research institutions/think-tanks, institutional and independent academicians, and scholars to submit research proposals that thematically cut across various dimensions of financial inclusion and household finance research. Details about the research tracks, grant award and other deliverables can be found here. The last date to apply with your research proposal is 31st May 2020.
We look forward to your interest and application under this initiative and hope to further build and strengthen the field of Household Finance Research in India.
Details of the call for research proposal is available on this page. In case you have any queries or need more information about the proposal you can reach out to us at householdfinance [at] @dvara.com
 Household Finance, Presidential Address to the American Finance Association https://scholar.harvard.edu/campbell/publications/household-finance-presidential-address-american-finance-association
 Consumer Finance- https://www.annualreviews.org/doi/10.1146/annurev.financial.050808.114457