Annual Report 2021-22

Salary Advance: Understanding how digitally addressing liquidity constraints through salary advances impacts women's bargaining power and economic empowerment


Unlocking Female Labor


Pinnia, Bangalore


900 participants


Busara Center for Behavioral Economics







The financial well-being of factory women workers is compromised due to various social and structural limitations. They face a liquidity constraint despite a stable and predictable income stream as many struggle to make their incomes stretch until the next payday. Households engaging in budgeting have to manage both their inflow of income and their outflow of expenditures. However, these two cash flow streams are often misaligned for many households as the frequency at which they make their consumption decisions often differs from the frequency at which they receive their pay. One of the reasons being that the households need to account for income receipts of different members, expected payments (utility bills, education), as well as unexpected expenses like medical expenditures or even expected lumpy payments like children’s school fees which can be quite costly for the households. Studies have shown that even developed countries like the USA are not an exception to such cases. The scarcity of smooth consumption over the course of a month leads to continued dependence on expensive informal credit like informal networks and moneylenders, the reduced ability to accumulate precautionary savings, and cope with income shocks. Furthermore, the lack of access to resources at the time of need leaves women with no agency leading to little to no participation in the financial decisions of the household. Their lower level of access to digital and financial services like access to bank accounts, formal credit, and saving instruments serves as a barrier too. Therefore, studying and understanding the impact that access to financial resources at a time of need can have on reducing dependence on informal credit structure, women’s bargaining power, and social status in the household becomes crucial.


Concerning factory women workers, can access to liquidity via digital flexible advance salary (interest-free salary advances) improve the household’s ability to cope with financial contingencies by providing resources at the time of need and reducing the reliance on informal debt? Can such an intervention with the intent of removing liquidity constraints improve women’s social standing and bargaining power in the household leading to better utilization of money? We have conducted two qualitative surveys in April and in August along with primary research all of which have been helpful to answer some of our research questions.


The objective of the study is to explore the possible linkages between the ability to access money when most required and the household-level bargaining power , and other measures such as stress, and work efficiency manifesting in the form of greater self-confidence and agency. The women workers in factories will be provided access to liquidity between their pay cycles through an employer salary advance intervention at a zero interest rate. The study is designed as a 6-month randomized controlled trial with individual-level randomization. There will be 900 consenting women workers from a Shahi factory who will be randomized on a 1:1 ratio into control and treatment groups, where the option of salary advancement will be provided to the treatment group, according to the below conditions:

Control: 450 participants will receive their salaries in line with the general practice where money is directly transferred to the workers’ bank account on the 7th of the next month.

Treatment: This group of 450 workers will be provided access to a digital platform for salary advance and will attend an initial training session on how to use the platform. This digital platform will be installed on a tablet(s) available in the factory.

We will compare outcomes of participants in the treatment group to the control group after the intervention in terms of ability to afford food/medical care, reduced difficulty in paying utility bills, health and education, financial strain, and resilience. We will also examine if the intervention results in reduced dependence on informal sources for short-term borrowings like pawn shops, money lenders, and social networks This will further help us analyze how it affects women’s bargaining power and self-efficacy, women’s involvement in spending decisions of the household such as healthcare and education, and financial stress.

The tool: Our salary advance app data Tablets with the salary advance application will be installed on factory floors for the treatment group. The workers in the treatment group will be enabled to access it through a login system that they will be provided. If one intends to withdraw salary up till 20th day of the month, the application will show them how much they’ve earned till that day and they can choose if they want to withdraw the entire salary up till that day or a certain amount. Depending on that, they can put in a request to add it to their registered bank. The salary will be transferred in real time to the workers' bank account. The treatment group workers will be provided with digital training and a demo to use the app and build trust into the app. Given the low levels of financial literacy of women in developing countries with little to no access to digital and financial services like access to bank accounts and formal credit and saving instruments, it becomes imperative to help them instill trust into the application.