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Library » Savings, Credit and Insurance among the Poor and Very Poor in Poor Developing Countries

Savings, Credit and Insurance among the Poor and Very Poor in Poor Developing Countries
Jun 2007, Rutherford, S.

Presentation made at “Global Symposium on Savings Assets and Financial Inclusion” June 27-29, 2007, Singapore

This presentation discusses the financial lives of the poor from the money management point of view.

The poor and very poor are more concerned about managing money than about financing microenterprises. They are not too different from the non-poor in their money management strategies. Their circumstances, however, push them to one end of a spectrum of money management behaviours. These include:

Constant and frenetic search to find ways to build sums for expenditure through saving and borrowing;
Using a multiplicity of instruments with idiosyncratic features and a seemingly unrelated range of prices;
Few opportunities for risk management to build and hold productive financial assets in the long term.

Poor people are active money managers, managing portfolios of loans from a variety of sources, memberships in savings and loans clubs and saving at home or with MFIs. The poor need financial services that are close to home and give them the opportunity to transact frequently and can handle very small and variable sums. Some MFIs, like Grameen II have the technology to meet the poor’s needs, enabling them to fight poverty.

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Journal Volume/Pages:
12