At the 2026 Africa Evidence Summit, researchers Ada González-Torres and Olubunmi Samuel-Adeyemi from Ben-Gurion University of the Negev presented findings from a study titled “Microfinance and Psychological Wellbeing: The Role of Financial Literacy.” The study examined whether financial literacy training could improve not only the financial outcomes of poor borrowers but also their psychological wellbeing, confidence, and sense of control over their economic lives.
The presenters explained that the study was based on a randomized controlled trial (RCT) conducted in collaboration with a microfinance institution among female borrowers in rural Nigeria. The research was pre-registered in the American Economic Association (AER) RCT Registry, and the study aimed to provide rigorous evidence on whether combining microfinance with financial education could generate stronger benefits for low-income women.
Introducing the study, the researchers explained that microfinance programmes have reached millions of poor borrowers worldwide, but evidence shows that the effects of microfinance alone are often modest and mixed. They noted that while access to credit provides opportunities for entrepreneurship and income generation, borrowers must also possess the knowledge and skills needed to manage loans effectively.
According to the presenters, financial literacy is particularly important for poor households and women, who are often the least likely groups to have access to formal financial knowledge and management skills. They explained that without proper financial literacy, borrowers may struggle to distinguish business and personal expenses, manage cash flows, save effectively, or invest profits productively.
The researchers referred to previous studies showing that financial literacy programmes can improve small-business performance. They further argued that integrated programmes combining financial services with skills development tend to be more effective, especially among extremely poor populations.
Beyond economic outcomes, the presenters highlighted the connection between poverty and psychological wellbeing. They explained that poverty itself creates stress, uncertainty, and feelings of limited control over the future. Therefore, they argued that interventions improving individuals’ economic prospects may also improve their mental wellbeing by increasing optimism, confidence, and perceived control.
The researchers explained that the central question of the study was:
Can financial literacy training improve the psychological and financial wellbeing of microfinance borrowers?
To answer this question, the study provided a six-week financial literacy training programme to female borrowers of a microfinance institution in rural Nigeria. The training was delivered in the participants’ local language, Yoruba, and focused on improving practical financial management skills.
The presenters explained that all participants already qualified for and held active loans, meaning the study examined whether adding financial education to existing microfinance services could generate additional benefits.
They presented the study’s theory of change as follows: financial literacy training would lead to better personal financial management, which would increase borrowers’ sense of control over their finances, improve their economic prospects, and ultimately enhance their psychological wellbeing.
The researchers explained that the study was conducted with LAPO Microfinance Bank, one of Nigeria’s largest microfinance institutions. They reported that LAPO was established in 1987 and currently operates in 33 of Nigeria’s 36 states, serving more than five million borrowers.
The study focused on LAPO branches in Osogbo, the capital city of Osun State in southwestern Nigeria. Osogbo has a population of more than 700,000 people, and the local LAPO branches serve over 26,000 customers.
The study sample consisted of female borrowers with active loans across four LAPO branches in Osogbo. The researchers explained that focusing on women was intentional because women in rural and low-income settings often face greater barriers to accessing financial information and economic opportunities.
The presenters explained that the initial administrative list provided by LAPO contained 373 female borrowers. After excluding individuals who lacked client-support officers, did not have phone access, or were deceased, the final eligible population consisted of 357 borrowers.
They reported that the researchers initially targeted a sample size of 130 participants, with 50 women assigned to the treatment group and 80 to the control group. However, anticipating possible participant dropout, they increased the recruitment target and ultimately obtained consent from 160 women.
Consent was collected through telephone interviews conducted in Yoruba. The baseline survey was then administered through individual interviews at LAPO branches, with a small number of interviews conducted by phone.
According to the researchers, the baseline survey contained 10 sections and 76 questions, covering demographic characteristics, loan information, business activities, financial beliefs, psychological wellbeing, and gender attitudes.
Following the baseline survey, participants were randomly assigned into two groups:
Treatment group: 82 female borrowers who received the six-week financial literacy training.
Control group: 78 female borrowers who did not receive training during the study period but were offered a one-day training session after the endline survey.
The presenters explained that randomization was conducted at the borrower level and stratified by important characteristics, including LAPO branch, client-support officer, lending group, meeting day, and group size, ensuring that treatment and control groups were comparable.
The researchers explained that the intervention consisted of a six-week financial literacy course delivered directly by the research team in Yoruba. Training sessions were organized in groups of approximately 20 participants, with each session lasting two hours per week.
They explained that weekly sessions were deliberately spaced to allow borrowers to continue operating their businesses while gradually applying newly acquired financial management skills.
Participants received practical learning materials, including expense trackers, notebooks, and pens. The curriculum focused on helping women understand how to attract, retain, multiply, and distribute money effectively.
According to the presenters, the six-week financial literacy training covered a range of practical topics designed to improve participants’ financial management skills and decision-making abilities. The training focused on helping borrowers distinguish between personal and business finances, accurately track income and expenses, develop effective budgeting practices, strengthen saving habits, manage loans responsibly, improve business decision-making, and understand the importance of financial planning for long-term economic stability. These lessons were intended to equip women with the knowledge and confidence needed to manage their resources more effectively and improve their financial wellbeing.
The researchers emphasized that delivering the training in the local language was a central component of the intervention. They explained that using Yoruba created a more comfortable and inclusive learning environment, allowed women to participate actively, and reduced barriers associated with formal financial education.
The presenters explained that the study was guided by three major theoretical perspectives.
First, they referred to Self-Determination Theory, which argues that psychological wellbeing improves when individuals experience autonomy, competence, and social connection. According to the researchers, the training and group-based learning environment were expected to strengthen women’s confidence and sense of control.
Second, they applied Financial Capability Theory, which suggests that greater financial knowledge leads to better money management practices and improved financial outcomes.
Third, they discussed Financial Stress Theory, explaining that limited financial knowledge can contribute to poor economic decisions, anxiety, and psychological stress. Therefore, improving financial capability could reduce uncertainty and improve wellbeing.
The researchers explained that the study followed a rigorous randomized controlled trial design.
All 160 women completed a baseline survey before random assignment. After the six-week training intervention, participants were surveyed again through an endline survey using largely the same questionnaire.
The researchers reported that the endline survey successfully reached 144 borrowers, representing approximately 10 percent attrition. Importantly, they noted that attrition was similar between the treatment and control groups, reducing concerns that dropout affected the validity of the findings.
The study received ethical approval from Ben-Gurion University of the Negev and was registered in the AER RCT Registry in May 2023. The researchers explained that the study examined two primary outcome areas:The researchers assessed the impact of the financial literacy training through a range of psychological, financial, and behavioural indicators. Psychological wellbeing was measured using established tools, including the Perceived Stress Scale and the Cantril Ladder, which captures individuals’ evaluations of their current situation and future prospects. The researchers explained that psychological wellbeing reflected participants’ happiness, sense of purpose, optimism, and perceived control over their future. Financial wellbeing was evaluated through indicators such as financial control, income, business profits, savings, and experiences with loan repayment. In addition, the study examined secondary outcomes to understand the mechanisms through which the training generated impacts, including improvements in financial literacy, the ability to separate personal and business accounts, saving behaviours, business management practices, gender attitudes, and beliefs about how wealth is generated.
The presenters explained that they estimated programme impacts using an ANCOVA regression approach. They compared endline outcomes between women who received training and those who did not, while controlling for baseline outcomes and participant characteristics.
According to the researchers, the analysis accounted for differences between participants by including baseline measures and controlling for characteristics selected through statistical methods. The approach also compared women within similar groups based on branch, lending group, client-support officer, meeting day, and group size.
The key coefficient of interest measured the effect of financial literacy training on participants’ outcomes.
Presenting the results, the researchers reported that financial literacy training generated large and statistically significant improvements in psychological wellbeing among female borrowers.
They explained that the improvement was driven primarily by increased optimism about the present and future rather than simply reductions in stress. Participants reported feeling more confident about their economic prospects and more capable of managing their financial lives.
The presenters also reported significant improvements in borrowers’ sense of financial control. Women who received the training felt more capable of making financial decisions, managing income, and planning for future needs.
Regarding financial practices, the study found that training improved financial literacy behaviours. Participants became more likely to separate business and personal accounts and demonstrated stronger saving habits rather than spending all available income.
The researchers reported that the overall financial wellbeing index also improved, although they noted that the estimate was less precise and required further investigation.
An unexpected finding was that the programme also influenced gender attitudes. Despite having no direct gender component, participants who received financial literacy training reported feeling more empowered to challenge gender-based violence and expressed stronger beliefs regarding women’s agency and decision-making power.
González-Torres and Samuel-Adeyemi argued that financial literacy training can significantly strengthen the impact of microfinance programmes by improving both economic outcomes and psychological wellbeing.
They emphasized that providing loans alone may not be sufficient to transform the lives of poor borrowers. According to their findings, combining financial services with practical education can help women make better financial decisions, increase confidence, and develop a stronger sense of control over their futures.
The researchers concluded that locally delivered, culturally appropriate financial education—especially when provided in indigenous languages and through supportive group settings—can be a powerful tool for promoting women’s economic empowerment and improving wellbeing among vulnerable populations.
Presenting the final results of the study, Ada González-Torres and Olubunmi Samuel-Adeyemi reported that the treatment and control groups were statistically comparable at the beginning of the research. They explained that baseline analysis showed no statistically significant differences between the two groups, confirming that random assignment successfully created balanced groups and strengthened confidence in the study findings.
The researchers emphasized that because the groups were similar before the intervention, differences observed at the end of the study could be attributed to the six-week financial literacy training rather than pre-existing differences between participants.
The presenters explained that the analysis used ANCOVA estimates, controlling for baseline outcomes and relevant participant characteristics. They reported that the financial literacy intervention generated significant improvements across several key areas, including:
Psychological wellbeing;
Financial wellbeing;
Sense of control over personal finances;
Financial literacy.
According to the researchers, women who participated in the training experienced measurable improvements compared with women in the control group.
The strongest impact was observed in psychological wellbeing. The researchers reported that the training increased psychological wellbeing by approximately 0.30 standard deviations, with the estimated effect remaining around 0.27 standard deviations after including additional demographic controls.
They explained that this increase was statistically significant at the 5 percent level, indicating that financial literacy training produced a meaningful improvement in how participants viewed their lives and future prospects.
The researchers noted that the improvement was mainly driven by greater optimism about the present and future rather than simply a reduction in stress. They interpreted this finding as evidence that improved financial knowledge and management skills helped women develop stronger expectations about their ability to overcome economic challenges and improve their livelihoods.
They connected this result with previous research showing that better economic opportunities and improved future prospects can positively influence psychological wellbeing among people living in poverty.
The researchers also examined whether financial literacy training improved participants’ overall financial wellbeing. They reported that the intervention increased financial wellbeing by approximately 0.07 standard deviations, rising to 0.11 standard deviations after including additional controls, with the controlled estimate statistically significant at the 10 percent level.
They explained that financial wellbeing included measures related to income, savings, business profits, loan repayment experiences, and individuals’ confidence in managing financial resources.
Although the direction of the results was positive, the researchers noted that financial outcomes were estimated with less precision than psychological outcomes. They suggested that economic improvements may require more time to emerge because changes in business performance, savings accumulation, and income generation often develop gradually.
One of the clearest findings of the study was the substantial improvement in women’s sense of control over their finances.
The researchers reported that trained participants felt significantly more capable of managing their money, making financial decisions, and planning for the future. They explained that this finding represented a strong first-stage impact, demonstrating that participants understood and applied the lessons provided during the training.
They also found significant improvements in financial literacy. Women who received the training demonstrated better financial management practices, including separating business and personal finances.
According to the researchers, these findings showed that the intervention successfully changed both knowledge and behaviour, suggesting that participants were not only learning financial concepts but also applying them in their daily lives.
The researchers highlighted an additional and unexpected finding: financial literacy training influenced participants’ attitudes related to gender equality and women’s empowerment.
They explained that although the training did not contain any direct content on gender issues, participants who received the intervention became more supportive of attitudes that challenge gender-based violence.
The researchers suggested that this spillover effect may have occurred because improved financial confidence increased women’s bargaining power and independence within households. They linked this interpretation to previous evidence showing that greater economic control can strengthen women’s ability to participate in household decisions and challenge harmful gender norms.
Discussing the broader meaning of the results, the researchers explained that the study demonstrated the importance of combining microfinance with financial education.
They argued that access to loans alone may not be enough for poor borrowers to fully benefit from financial opportunities. Instead, borrowers need the knowledge and confidence to manage resources effectively.
The study showed three important pathways through which financial literacy training created impacts:
Improved knowledge and financial practices:
Participants learned how to manage money, separate accounts, save, and plan expenditures.
Greater financial confidence and control:
Women developed a stronger sense of agency over their economic decisions.
Improved psychological wellbeing:
Better financial control and improved expectations about the future contributed to increased optimism and wellbeing.
The researchers explained that while financial outcomes appeared promising, changes in income, profits, and savings may require longer periods to become fully visible.
In concluding their presentation, González-Torres and Samuel-Adeyemi stated that a six-week financial literacy training programme significantly improved the lives of female microfinance borrowers in rural Nigeria.
They summarized the main findings as follows:
Financial literacy training increased psychological wellbeing by approximately 0.3 standard deviations.
The intervention substantially increased women’s sense of control over their finances, with effects of approximately 1.8 standard deviations.
Financial literacy improved by around 0.5 standard deviations.
The programme strengthened women’s empowerment by encouraging attitudes that oppose gender-based violence.
Financial and economic wellbeing indicators moved in a positive direction, although the effects were not estimated with the same level of precision and may require more time to fully materialize.
The researchers concluded that financial literacy should be considered an important complement to microfinance programmes, particularly for poor women who face barriers to financial information and economic decision-making.
They recommended that future research should examine the separate and combined effects of microfinance and financial literacy through cross-randomized studies to better understand how credit access and financial education interact in improving household welfare and women’s empowerment.
