The savings of the poor: improving financial services in Bangladesh

✍ Scribed by Stuart Rutherford

• Publisher: John Wiley and Sons
• Year: 1998
• Tongue: English
• Weight: 189 KB
• Volume: 10
• Category: Article
• ISSN: 0954-1748
• DOI: 10.1002/(sici)1099-1328(199801)10:1<1::aid-jid426>3.0.co;2-#

✦ Synopsis

The capacity of the poor of Bangladesh to save is surprizingly large Ð surprizing to observers, and surprizing to the poor themselves. This capacity has long been used, with modest success, as the basis for self-help savings-and-loan devices that the poor (like others) have used in the absence of formal banking services. But over the last twenty years an innovative form of ®nancial service provision has been developed in Bangladesh by `micro-credit institutions' (MCIs) such as the Grameen Bank, BRAC and ASA which has exploited this capacity to save, to the bene®t of millions of rural people, and at the same time brought pro®ts to the MCIs. Splendid though this development has been, it could be more splendid. For under the systems adopted by the MCIs Ð who are fundamentally lenders rather than ®nancial intermediaries Ð the poor can exploit their capacity to save only by going into debt. This paper argues that a shift in approach would allow the MCIs to oer a much better service to a broader range of customers (including the very poor), and bring surprizing bene®ts to themselves as well.