increased) use of their credit cards may further strengthen the business case to continue BBVA Bancomer financial literacy program.

# **2.3 Outcomes and Measurement**

We obtained administrative data from BBVA Bancomer on 136,104 credit card clients from December 2014 to February 2017. The data set contains a rich set of information summarizing the monthly evolution of each client’s credit card balance, payments, purchases, delays, profitability for the bank and ownership of basic deposit accounts with the bank. The data set also includes the seniority of clients with our partner bank and their background characteristics such as age and gender.

We center our analysis on a set of outcomes that we believe are more likely to be affected by the interventions, based on the material covered both in the workshops and coaching. More concretely, there are three rules that the workshops and coaching emphasize to help participants achieve a more responsible use of their credit cards and avoid extra fees and future over-indebtedness. The first rule is to cover at least the minimum payment required by the bank. The second one is to identify from the credit card statements the payment due date and make sure to pay before that date. A third advice is to limit the use of credit to an amount that the client can comfortably pay later. Along these three rules, the importance of saving and better managing expenses is frequently discussed.

We first test whether participants of the interventions are more likely to follow these rules by analyzing key outcomes directly related to them. These outcomes are: i) the likelihood of paying more than the minimum payment; ii) the likelihood of paying past the payment due date; and iii) total credit card purchases. As the interventions highlight the importance of saving, we also analyze whether participants are more likely to own a basic deposit account after the interventions. Finally, we investigate how profitable these financial education interventions are for our partner bank. We do this by analyzing a variable that measures the profitability of each client for the bank at every month.<sup>9,10</sup>

# **2.4 Samples and Random Assignment**

Given that we expect financial education interventions to have a greater impact among participants with riskier credit card management practices, we stratified the sample into six groups based on two risk measures of the clients. The first measure corresponds to the risk classification of each client. Every client is classified by our partner bank as low risk, medium risk and high risk. Since clients who struggle to cover the minimum payment are at a higher risk of facing credit card management issues in the future, we produce a complementary risk measure that classifies clients

> 9 Our profitability variable corresponds to the difference between the revenue obtained from a client and the expenditures he or she generated for the bank. The revenue is measured as the interest income plus paid commissions and fees. The expenditures include operational costs, cost of capital, loan losses and reserves.

> 10 On one hand, profits to the bank may increase if clients spend more on their credit cards and thus the revenues from commissions and interest income rise. In addition, if clients are more likely to pay on time, the costs of monitoring and recovering loans drop. On the other hand, profits may decline if better credit card management translates in lower interest payments and fees.

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