A growing number of Canadians today find themselves financially vulnerable and struggling with household finances, even in a relatively strong economy. With rising inequality and unstable earnings, many households now face realities that are more complex than ever before. A vulnerable household is a low-income and low-asset household that is unable (or close to unable) to meet its basic needs, particularly in the event of a financial downfall such as job loss or unexpected health expense. Modest middle-income households with a high debt load are also at risk of becoming financially vulnerable, for example when relying on a sub-prime lender such as a payday lender. This research project will investigate causes of financial vulnerability and examine the effectiveness of different responses to it.
Financial empowerment is an emerging response to impoverishment and financialization. It seeks to expand the capacity of vulnerable people through education, training, asset-building, improved access to safe banking and credit services. It is a movement by people from a number of sectors including civil society, the state, and elements of the business community.
This research project is seeking to understand the problem of financial disempowerment and examine a variety of practical and policy actions being taken to foster financial empowerment, among other objectives. The research is working through a capability lens (Sen 1999; Nussbaum 2006) and is using the financial diaries methodology (Stuart and Cohen 2011; Collins et al., 2009).
An emerging response to this vulnerability is “financial empowerment.” By this we mean enhancing the individual and collective capacity to identify financial interests and goals and then to achieve them. Coming up with the right tools – practices, policies, and interventions – with which to empower vulnerable households, however, requires better data about low- and middle-income vulnerable households. Using an innovative version of the Financial Diaries methodology, combined with the regulator and practitioner research components, this project is providing in-depth data and analysis to regulators and practitioners, and foster dialogue between these groups.