Professor Lauro Emilio Gonzalez Farias is a part of the Department of Finance at School of Business Administration of São Paulo, Brazil, where he also coordinates of the Center for Studies in Microfinance and Financial Inclusion.
He was a visiting professor at Université Paris-Dauphine, France, between 2013 and 2017, a visiting researcher at Columbia University, United States, from 2014 to 2015, and a fellow of the Microfinance Management Institute in 2005.
He was at Delhi Technological University for International Conference on Business and Management, organised by Delhi School of Management from 29-30 March 2019.
In the span of almost two decades, you have worked your way through a bachelor’s degree in business administration, a master's and a subsequent Ph.D. in business economics, followed by a postdoctoral. What drove you to study the field with such depth?
When I was at my business undergraduate school, I liked economics. I wanted to get deeper into the subject. I was curious and wanted to study more about it.
In the beginning, I combined consulting and research. But as time went on, I saw myself doing more research than consulting. It was then that I realized that I was happy in the field of academia.
It’s a good thing that at School of Business Administration of São Paulo, there’s a connection to the market. This makes it easy to conduct research. At the same time, I direct the Centre for Microfinance and Financial Inclusion Studies where we do applied research and address issues related to real-life situations.
What were your observations during your stay in Brazil, France, and the US?
It was very exciting to have a teaching opportunity in France subsequently followed by one in the US. I wasn’t expecting such an opportunity to come up in France. However, once I got it, I eventually ended up going there seven times in a row.
I had done a part of my Ph.D. in Columbia. Going back to the United States helped me reconnect.
In both cases, I taught the subject of financial inclusion. It also happens to be the subject of the Centre for Microfinance and Financial Inclusion Studies at the School of Business Administration of São Paulo.
In France, the students are more formal and you have to provoke them to engage. In the US, they are less formal and more engaging from the very start. Also, students in the US were from all over the world and that was an enriching experience. Overall, the level of debates and discussions was good and they were interesting. Even more so, because I was able to compare their thought process with that of the students I have in Brazil.
What can you say about the effect of poor financial literacy in developing countries?
"...people are not buying what they want, but what their financial institutions want to sell"
People have to be better educated to be well-prepared for consumption of financial services.
However, when people use financial products they are being influenced and provoked by the institutions. The people are not buying what they want, but what their financial institutions want to sell. There is a lot of manipulation in the market. There’s a very interesting book titled ‘Phishing for Phools’ which analyses multiple such cases.
The bottom line is that good financial education should be provided to both: the borrowers as well as the banks & institutions.
What conclusions have you drawn from your research on segmentation in financial services in Brazil?
The main takeaway from the research is that there are various profiles when it comes to different financial services. The poor are many-a-times classified in just one single category, however there are many different types of ‘poor’. The base of the pyramid is very heterogeneous.
For example, some people consume a lot of credit and get indebted, and some people don’t like using credit and are very much in control of their expenditures. Financial services and products have to be made to cater to wider needs of the people.
Students are often confused about what they want to do with their future. What would you suggest for them?
"If you have a lot of certainty at an early age you’re doing something wrong"
First of all, I would like to say that confusion is a part of life. If you have a lot of certainty at an early age you’re doing something wrong. It is good to have doubts. As someone who has researched the bottom of the social pyramid, I’d say that this is an appropriate doubt to have. We come from developing countries and it is possible that we could be in a much worse situation.
My advice would be to enjoy this period of your life and get as much as you can from the environment, the academia, and the university. Some of you, like me, will eventually return to the academia and give back.