A Critical Typology of Financial Services for the Poor

Topic :

This paper explores the range of indigenous systems of financial service provision for the poor and demonstrates the diverse, ingenious and sometimes complex ways that have been devised to enable poor people to better manage their finances. Each example includes a boxed description of a real case and they are organised into categories, e.g.

  • Informal user owned devices – neighbours, ROSCAs and savings clubs
  • User owned devices – popular insurance, building societies and cooperative business finance
  • Informal services for profit – deposit takers and lenders

The author also describes some NGO assisted schemes and a selection of formal services. Altogether almost 60 financial service devices are described in this paper, mostly from Asia, and it is an extremely revealing account. It highlights the need for practitioners to learn from financial services that already exist before designing new interventions, and to innovate and experiment with a wider range of services than savings and credit.

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