When low-income communities adopt formal banking practices, their finances may not be the only thing subject to change – political opinion and political behavior can also shift dramatically as residents draw on new sources of cash and credit.
That trend is occurring in many of the slum communities outside Manila, according to Nancy Hite, new assistant professor of political economy at The Fletcher School at Tufts University. Researching for her dissertation, “Economic Modernization and the Disruption of Patronage Politics: Experimental Evidence from The Philippines,” Hite found that individuals who gained access to formal banking services were also likely to demonstrate a decrease in political engagement.
Hite joined the Fletcher faculty this fall after completing a Ph.D. in Political Science at Yale University. She is currently teaching a course on global political economy and will co-lead a Ph.D. field seminar on comparative politics and international relations in the spring.
A scholar of comparative politics, Hite is broadly interested in external factors that influence political engagement in developing countries, such as changing economic circumstances or changing institutions. Her work has focused on a number of topics including market informality, corruption and access to state institutions. She has studied everything from postal delivery theft in the Philippines to public opinion in Palestine. Despite the diversity of subjects, Hite’s research is unified by her use of experimental methods as well as her incorporation of mapping technologies.
“It is very important for me to bring information from a spatial dimension into my research,” Hite said. “Nearly everything I do involves a map, whether it’s mapping public mood, mapping different research questions or mapping the location of specific outcomes. I’m very happy that Tufts is so accommodating to researchers who employ GIS (geographic information systems) technology. In particular, the university wide GIS center provides data that are not publicly available and has professional staff that can assist in problem solving.”
Hite’s dissertation on financial inclusion in the Philippines grew out of an interest in political clientelism. Noting that local political power brokers often controlled informal moneylending services, and that loans were sometimes tied up with direct or indirect requests for political engagement, she was curious to discover how borrowers’ political activities might change as they began relying on formal financial institutions.
Her curiosity was well timed: Dean Karlan, professor of economics at Yale University, was about to launch a study in the Philippines on the profitability of financial inclusion. Hite recognized the study could also provide a valuable opportunity to explore how inclusion impacted local political networks. She used loan applications from Karlan’s study to locate borrowers living in the slum communities near Manila, ultimately conducting hundreds of interviews that illuminated how financial modernization was impacting the borrowers’ communities.
Hite discovered that as borrowers became less dependent on informal moneylenders, they were also less likely to become involved politically; for example, to vote or provide local public goods. Hite says this is neither an overall positive or negative finding.
“Informal banking … leaves open a lot of avenues for both positive and negative forms of political engagement,” Hite said. “Formalization can remove hostile political interactions, but not everybody is engaging in the informal networks in a necessarily coercive way.”
Further, Hite said, that the formalization of finance can also provide opportunities for political influence. At one bank, for example, she discovered that loan officers were required to wear the t-shirts of certain politicians who saw the loan counter as a campaign opportunity. Such activities are considered to be clientelistic in the sense that citizens’ access to formal finance at banks may also come with political strings attached.
The real takeaway, according to Hite, is that NGOs and organizations working to expand microfinance should think more critically about the potential social welfare outcomes of both formal and informal forms of banking.
Hite is eager to continue exploring the relationship between financial inclusion and political engagement within different geographic contexts. She plans to develop similar projects in rural Mexico and rural India, and is excited about the possibility of involving Fletcher students in her research.
“The students here are sharp and idealistic,” Hite said, “and I know their insights and conversations will help complement my work.”
She is also excited about her teaching duties. “I like to help people with problem solving,” she added, “to be the person that challenges their views, to encourage them to question things.”
Fletcher’s interdisciplinary environment is another draw for Hite, who values the opportunity to work across different academic fields. Prior to her graduate studies, Hite completed an LL.M. in Law and Economics at the University of Hamburg, Germany. While at Yale earning her Ph.D., she worked at the University’s Social Science Statistics Lab. Meanwhile, her primary Ph.D. advisor, Susan Rose-Ackerman, holds a joint appointment between Yale Law School and Yale’s Political Science Department.
“I feel more comfortable in an interdisciplinary environment,” Hite said, “because my own work is interdisciplinary.”
In between teaching and research, Hite hopes to carve out a bit of time for another passion: jewelry making. She collects beads during her travels across the world and uses them to create intricate earrings and bracelets, each one telling a different story from a different country. Hite said jewelry making is one of her favorite ways to wind down. Ever the professor, she also noted that if Fletcher students are interested in learning, she would be willing to teach them.
--- Emily Simon (F13)