There is a lack of consensus between different researchers and organizations on how exactly to define and measure financial health. As a result, it is difficult to understand the relative impact of different policies and interventions on improving financial health, as the way progress is measured will vary from case to case.

This work proposes a quantitative measurement tool for financial health that can be adopted globally to benchmark progress as well as to better understand the impact of specific policy interventions and product solutions. The tool is structured around three primary concepts: Access-to-Funds (a final outcome construct), Access-to-Finance, and Financial Behavior (intermediate constructs that each incorporate several components).

Between June 2018 and February 2019, IPA administered this survey to 11,876 individuals across eight countries: Afghanistan, Bangladesh, Colombia, the Dominican Republic, Ghana, Peru, the Philippines, and Uganda. The resulting paper describes response patterns from these countries, as well as correlations between the Access-to-Funds questions and the Access-to-Finance and Financial Behavior questions. The behavior and access questions explain a non-trivial part of the variation in Access-to-Funds, even after controlling for demographic and socioeconomic variables.

Financial Health Survey Manual

For those seeking to measure financial health in a quick and simple way, IPA recommends applying only the Access-to-Funds module of the questionnaire. The questions in this module are identical to the 2020 Global Findex's resilience questions, promoting standardization in data collection across the sector and enabling researchers to leverage additional data from the Global Findex database.

The analysis also sought to identify the most important questions from the Financial Behavior and Access-to-Finance sections. Results showed that particularly in the Financial Behavior section, no questions emerged as clear winners across multiple settings. For those wishing to use a longer version of the instrument, IPA recommends selecting from the long-form version of the survey instrument, either choosing indicators most relevant to a given setting or collecting all responses and then testing which questions are most strongly correlated with financial health for the target population. The instrument also includes a set of context questions, including questions about income volatility and predictability, which were found to be highly correlated with financial health.

For a full discussion of the development, piloting, and empirical validation of these indicators, as well as findings, please consult the project's publication.