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Informal markets: What lessons can we learn from them?

This policy brief examines the various informal markets that the rural poor have traditionally turned to for their financial needs. For example:

• Lending and Borrowing among relatives, neighbours and friends
• The rotating credit and saving associations (ROSCAs)
• Informal moneylenders
• Tied credit

Important lessons to be learned from the informal sector include:

• Building credible long-term partnerships
• Tailoring financial services to specific demand patterns
• Knowledge of local economy is important; therefore, so is decentralisation of decision-making
• Not all financial contracts are self-enforcing and adequate steps must be taken to enforce contract compliance

• Resource type Document
• Author Sharma, M.; Zeller, M.
• OrganisationIFPRI
• Year of Publication2000
• RegionGlobal
• LanguageEnglish
• Number of pages2 pp.
• EditionRural Financial Policies for Food Security of the Poor: Policy Brief
• Keywords Informal Finance, Informal Sector, Financial Services