Safe and Accessible: Bringing Poor Savers into the Formal Financial System

Despite significant evidence to the contrary, many financial institution managers and policy makers do not believe poor people save money. They tend to assume that poor people are “too poor to save,” that they prefer to consume rather than save excess income, or that when they do save it is only to access a loan.

The numbers, however, paint a different picture. Research has repeatedly demonstrated that saving is central to poor people’s economic management strategies. Projects such as the Financial Diaries initiatives in India, Bangladesh, and South Africa; MicroSave in eastern and western Africa; and studies by the International Food Policy Research Institute, for example, have documented savings practices among the poor.

What is unclear is how well formal financial institutions satisfy poor savers’ needs. Although over 90 percent of adults in industrialized economies typically have accounts in financial institutions, market studies in some areas of the developing world indicate penetration rates as low as 6 percent. Access to savings services for the poor thus varies widely.

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