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Portfolios of the Poor — How the World's Poor Live on $2 a Day
Abstract
Nearly forty percent of humanity lives on an average of two dollars a day or less. If you've never had to survive on an income so small, it is hard to imagine. How would you put food on the table, afford a home, and educate your children? How would you handle emergencies and old age? Every day, more than a billion people around the world must answer these questions. Portfolios of the Poor is the first book to systematically explain how the poor find solutions to their everyday financial problems. The authors conducted year-long interviews with impoverished villagers and slum dwellers in Bangladesh, India, and South Africa--records that track penny by penny how specific households manage their money. The stories of these families are often surprising and inspiring. Most poor households do not live hand to mouth, spending what they earn in a desperate bid to keep afloat. Instead, they employ financial tools, many linked to informal networks and family ties. They push money into savings for reserves, squeeze money out of creditors whenever possible, run sophisticated savings clubs, and use microfinancing wherever available. Their experiences reveal new methods to fight poverty and ways to envision the next generation of banks for the "bottom billion." Indispensable for those in development studies, economics, and microfinance, Portfolios of the Poor will appeal to anyone interested in knowing more about poverty and what can be done about it.
... Voluntary deposit mobilization is consistent with the double bottom line of microfinance. Firstly, voluntary deposit is consistent with the social objectives of MFIs to support the outreach mission by providing micro-deposits that are very much needed by clients, including small and micro-enterprises (Collins et al. 2009). Secondly, voluntary deposit mobilization is consistent with the financial objective of MFIs to lower costs (Cozarenco, Hartarska, and Szafarz 2022) by accessing both deposits and wider capital markets, thereby decreasing dependence on subsidies while maintaining outreach to clients excluded by formal financial services. ...
... Over time, MFIs diversified their services and funding sources and many started to transform into a different type of institution, one that could offer deposits to clients, known in the literature as the commercialization of microfinance (Armendáriz and Morduch 2007;D'Espallier et al. 2017). While microcredit is a wellestablished and somewhat controversial tool for inclusive finance (Hartarska and Cull 2023;Li et al. 2020), the poor could benefit even more from deposit accounts (Collins et al. 2009) and the proportion of depositors served affects the MFIs (Tchuigoua 2016). We focus on the role of mandatory deposits and evaluate how they affect the performance of MFIs. ...
... The literature on the demand side of deposits shows that low-income clients and entrepreneurs lack safe places to deposit their savings and often use alternative and informal ways to save (Collins et al. 2009). The positive impact of deposits on clients' welfare is well documented. ...
Building on the economies of scope framework, we estimate how the use of mandatory deposits alone in credit-only microfinance institutions (MFIs) or in combination with voluntary deposits in credit-plus-deposit MFIs is associated with the performance of MFIs in terms of financial sustainability, breadth, and depth of outreach. We account for MFIs’ double bottom line with the seemingly unrelated regressions method and use data from 544 MFIs worldwide for the period 2000–2015. We show that, for credit-only MFIs, mandatory deposits are associated with improved depth of outreach to the poor. For credit-plus-deposit MFIs, we find a trade-off: mandatory deposits are associated
with a decrease in financial sustainability but an increase in breadth of outreach. We also analyze the moderating role of mandatory deposits. High risk loans collateralized by mandatory deposits are more likely to reach poorer clients in credit-only MFIs and help to reach more borrowers in credit-plus-deposit MFIs, but at a higher cost.
... Financial diaries are systematic records of all daily income and expenditure transactions, aimed at understanding money management strategies over time [38]. Originally developed to explore the financial behaviour of individuals and households living on low-incomes in countries such as India, Bangladesh and South-Africa, this method has recently been adapted for use in high-income contexts such as the United States [39], Canada [40] and the UK [41]. ...
... In line with seminal financial diaries research [38][39][40][41], the term 'diaries' was used to reflect the high-frequency of data collection and not the diarists logging transactions themselves. Researchers systematically recorded almost 9,000 diarists' income and expenditure transactions. ...
... A mixed-methods approach was used to analyse diary data [38][39][40][41]. The quantitative data from the financial diaries and the qualitative data from the event records and in-depth interviews was analysed concurrently and integrated for interpretation. ...
People on low-incomes in the UK develop multiple long-term health conditions over 10 years earlier than affluent individuals. Financial diaries -new to public health- are used to explore the lived experiences of financially-vulnerable individuals, diagnosed with at least one long-term condition, living in two inner-city London Boroughs. Findings show that the health status of these individuals is a key barrier to work opportunities, undermining their income. Their precarious and uncertain financial situation, sometimes combined with housing issues, increased stress and anxiety which, in turn, contributed to further deteriorate participants’ health. Long-term health conditions limited the strategies to overcome moments of financial crisis and diarists frequently used credit to cope. Restrictions to access reliable services and timely support were connected to the progression of multiple long-term conditions. Models that integrate healthcare, public health, welfare and financial support are needed to slow down the progression from one to many long-term health conditions.
... In the developed world, people have more choices in the form of credit cards, debit cards, cheque accounts, automated teller machines (ATMs) among others. However, in dealing with personal financial management, it is not uncommon that many individuals in the developed nations run into financial problems (Collins et al. 2009). Unfortunately, the poor people in developing countries, who are more vulnerable to risk, lack these financial tools to manage their lives and some may run into serious financial problems due to income shortfalls. ...
... Unfortunately, the poor people in developing countries, who are more vulnerable to risk, lack these financial tools to manage their lives and some may run into serious financial problems due to income shortfalls. However, others are able to work assiduously to overcome many difficult issues in life to meet these demanding events so as to smooth both consumption and income (Morduch, 1995), and cope with 'life cycle' needs, emergency needs and investment opportunities There are three areas in life where people (and the poor alike) use financial tools to manage what Collins et al. (2009) termed the so-called 'triple life issues' in everyday activities. The first is life-cycle needs such as child birth, marriage, funeral and education among others. ...
... Some of the financial tools poor people use include but not limited to lending, borrowing, and savings. Detailed description of most of the financial instruments is found in Collins et al (2009);Collins (2005) and Rutherford (2002). In this paper, we briefly discuss the types of savings serving as alternative financial tools developed and in use by poor people. ...
Traditionally, it is assumed without empirical evidence, that poor people are too poor to save hence hove been ignored by formal financial institutions. However, there exists a body of evidence showing the saving powers of the poor when given the chance. This paper presents some of the financial instruments used by poor people and gives brief discussions on the types of savings tools poor people use. These tools, the Rotating Saving Credit Associations (ROSCAs) and the Susu system, are traced to their historical roots. We then use data to show that clients of a microfinance institution actively use these savings instruments to raise lump sum. The data show that clients use several saving instruments in addition to the institutions compulsory dues. These savings tools, ignored by the financial sector could be used to mobilize deposits from the poor people by the sector. It is envisaged that both the formol and informal financial sectors would learn from such ancient savings institutions to mobilize deposits from poor households.
... Microfinance contributes to household stability, as observed in reduced vulnerability to economic shocks and improved household income resilience (Collins et al., 2009). Table 3 summarizes the degree to which households report enhanced financial resilience and security. ...
... Table 3 summarizes the degree to which households report enhanced financial resilience and security. Reduced Economic Vulnerability 64% 69% 59% 65% Households engaging in microfinance activities frequently experience increased financial stability and reduced economic vulnerability, as shown in Table 3 (Collins et al., 2009). Participants in India and Bangladesh display over 65% income stability improvements, with microfinance institutions (MFIs) enabling households to accumulate small assets and withstand economic disruptions more effectively (Hulme & Mosley, 2009). ...
This study explores the social impact of microfinance, assessing its effects beyond traditional economic metrics, such as income growth. Employing a mixed-method approach, it analyzed quantitative data from existing case studies and qualitative insights from thematic analyses, focusing on education, healthcare access, and empowerment among microfinance recipients. Major findings reveal a statistically significant link between microfinance participation and improved social indicators, with Chi-square analysis confirming strong social empowerment correlations, particularly in countries like Bangladesh and India (p < 0.05). Additionally, ANOVA results highlight regional differences in educational and healthcare impacts (p < 0.01), while correlation analysis shows a positive relationship (r > 0.7) between economic stability and social gains. The study concludes that microfinance yields holistic benefits, suggesting that future assessments should integrate both economic and social metrics. Recommendations include adopting comprehensive evaluation frameworks, promoting empowerment initiatives, enhancing healthcare and education access, fostering community cohesion, and tailoring programs to cultural contexts.
... The absence of substantial savings and reliance on informal financial support leaves low-income individuals vulnerable to financial shocks. This scenario underscores the necessity of accessible, inclusive financial services tailored to low-income households, which could reduce dependence on informal networks and improve economic resilience (Collins et al., 2009). ...
... Moreover, reliance on social networks for financial assistance reflects Network Theory, which shows that while these networks can offer temporary relief, they may lack the resources necessary for significant upward mobility (Portes, 1998). The lack of substantial savings, coupled with reliance on informal support, underscores the urgent need for accessible financial services tailored to low-income households, which could enhance their economic resilience (Collins et al., 2009). ...
This review systematically examines the expenditure patterns of low-income households, focusing on how limited financial resources influence their spending decisions. It reveals that a significant portion of income is devoted to necessities such as food, shelter, and utilities, leaving little room for discretionary spending. The financial burden of debt repayment, particularly from high-interest loans, is a major challenge, as are healthcare and emergency costs, often exacerbated by a lack of insurance and savings. The review also highlights the prioritisation of affordable education and skills development, the low savings rates driven by immediate needs, and the reliance on informal support networks. Additionally, it underscores the common practice of substitution and bargain hunting as strategies to manage scarce resources. The findings emphasise the need for targeted policies to enhance financial stability and well-being among low-income populations.
... On the other hand, people with less education often do not know how to take advantage of the benefits of managing and using financial services, and may make inappropriate decisions about their savings, debt and investments that can be detrimental to their own and their family's well-being. Collins et al. (2009) have identified as a primary objective of FI the provision of financial capabilities and skills to poor and vulnerable people in order to improve the management of their portfolios, which means to increase their financial literacy. In this sense, the relatively low level of education in rural areas could hinder the use of financial services, weakening the positive effects of FI (Ardic et al., 2011;Cole et al., 2011), and increase inequalities or gaps between rural and urban areas (Young, 2013). ...
... As noted above, authors such as Collins et al. (2009) indicate that financial literacy is the main determinant of individual FI. Financial literacy, "measures how well an individual is able to understand and use information related to personal finance" (Huston, 2010: 306). ...
Financial inclusion, which means the promotion of an affordable, timely and adequate access to a wide range of regulated financial products and services, as well as its use by all the segments of the society, is a high potential tool that may contribute to the development of the rural environment, while its absence could in turn cause a major harm. The availability of a sufficient level of financial literacy, which can be defined as the ability to understand financial concepts and risks, as well as the motivation and trust to use it when making financial decisions, is frequently deemed to be a need to reach financial inclusion by the academic literature. Financial literacy is, in turn, influenced by different variables, such as the degree of rural or urban predominance, the level of education and the available income in the household. This paper analyses the impact of such factors on financial literacy. The degree of financial literacy tends to be lower in rural environments, with limited incomes and poorer educational backgrounds, which creates a vicious circle that potentially worsens the situation of what has been called the empty Spain. Considering the importance of financial literacy to reach financial inclusion, we remark the potential of digital transformation as a valuable tool to break this negative trend in the less populated Spanish regions, and so, a cornerstone for the regenerative development of the Spanish rural areas.
... We implemented these questionnaires in 10-15 villages with 400-600 families and 1600-2000 individuals interviewed repeatedly in 2010, 2016-17 and 2020-21. 6 Aware that memory and gender biases persist in questionnaire surveys, we also used financial diaries, a counting method designed to provide an exhaustive inventory of incoming and outgoing flows of a residential unit (Collins et al. 2009). ...
... The Findex surveys have the merit of including informal finance (albeit in a simplistic way that is far removed from local realities, at least in India). It is highly likely that they were inspired by the results of the financial diaries of the team of field economists led by Jonathan Murdoch and Stuart Rutherford (Collins et al. 2009). These financial diaries confirmed with numbers what economic anthropology had been observing for a long time. ...
... Los microcréditos han sido identificados como herramientas esenciales para promover el emprendimiento y el desarrollo económico en sectores menos favorecidos, proporcionando capital a pequeños empresarios que de otra manera no tendrían acceso a financiamiento bancario tradicional (3), (24). ...
El estudio "Los Microcréditos de la COAC Riobamba Ltda., Agencia Guano y su incidencia en el desarrollo microempresarial del cantón Guano, periodos 2020–2021" analiza el impacto de los microcréditos en la economía local y en la evolución de las microempresas en Guano, con el propósito de evaluar la importancia de estos créditos en la creación de valor y el desarrollo empresarial, la investigación se organiza en seis capítulos, desde la introducción hasta la formulación de estrategias destinadas a potenciar el desarrollo microempresarial. Mediante el método hipotético-deductivo, se planteó una hipótesis principal para determinar si los microcréditos constituyen un elemento esencial en el desarrollo empresarial del cantón. Se utilizaron técnicas descriptivas y de campo, aplicando 304 encuestas a socios beneficiarios de microcréditos y realizando una entrevista al coordinador de la Agencia Guano, con el fin de obtener datos empíricos sobre los efectos de estos créditos. Los resultados obtenidos demuestran que los microcréditos han influido en el desarrollo de microempresas, contribuyendo al aumento del empleo y a la estabilidad económica de las entidades beneficiadas. Se destacó, además, la relevancia de los microcréditos en la respuesta a la crisis económica provocada por la pandemia de COVID-19, adaptando las condiciones de crédito para mejorar el acceso y la gestión financiera. Este análisis no solo corroboró la hipótesis de que los microcréditos son cruciales para el desarrollo empresarial en Guano, sino que también permitió elaborar recomendaciones estratégicas para optimizar su efectividad; entre estas se incluyen la implementación de políticas de crédito más flexibles y el fomento de programas de fidelización y confianza entre los microempresarios. En definitiva, este estudio no solo confirmó el papel fundamental de los microcréditos como herramienta de desarrollo económico y social en el cantón Guano, sino que también resaltó su efectividad en promover la estabilidad y el crecimiento de las microempresas.
... In light of the study's findings and corroborating literature, it is advisable to implement policies that bolster formal microcredit facilities as a viable tool for poverty reduction. Continuation and enhancement of these services could play a significant role in the ongoing efforts to improve the livelihoods of poor and nearpoor populations (Collins et al., 2009;Copestake et al., 2005). Furthermore, policymakers and microfinance institutions should focus on promoting the productive use of microcredit, particularly in non-agricultural activities, and providing support services to help households effectively manage their loans and invest in income-generating ventures. ...
This study employs difference-in-differences methodology to examine the impact of formal microcredit on income levels of poor and near-poor households in Vietnam using panel data from 2016-2018. Findings reveal microcredit participation leads to a 0.021% increase in average income over time, with loan size, purpose, and household characteristics significantly influencing outcomes. The research contributes a nuanced analysis of microcredit's differential effects across income groups, incorporating credit use as a key variable. Results have implications for designing targeted interventions maximizing microcredit's poverty alleviation potential. Policymakers should promote productive credit use and support services tailored to borrowers' needs.
... Due to the aforementioned reason poor wealth status is highly related to the release of stress hormone cortisol [45]. Moreover, This financial uncertainty creates added stress, leading to heightened anxiety and chronic worry about meeting basic needs such as housing, food, and healthcare [46]. Individuals living in poverty frequently encounter a range of environmental stressors that can exacerbate both physical and mental health challenges [17,47]. ...
Background
Mental health problems, particularly anxiety and depression, are indeed among the leading health challenges worldwide, affecting individuals across all age groups and geographic locations. The relationship between mental health and socioeconomic factors, including household wealth status, is well-documented. However, there are currently no studies demonstrating a causal relationship between household wealth and common mental disorders, such as anxiety and depression. Therefore, this study aimed to assess the effect of household wealth status on anxiety and depression through Propensity Score Matching analysis (PSM) analysis.
Methods
This study used the recent 2022 Nepal Demographic and Health Survey (NDHS). A weighted sample of 7411 reproductive-age (aged 15–49 years) women who were interviewed for mental health conditions were included in this study. Anxiety and depression were the dependent variables of this study. The NDHS utilized the Generalized Anxiety Disorder 7-item scale (GAD-7) to assess levels of anxiety among participants and the Patient Health Questionnaire 9 (PHQ-9) to evaluate depression. PSM analysis was employed to examine the causal connection between household wealth and women's anxiety and depression by controlling for confounding variables.
Results
The average treatment effects (ATE) of non-poor household status on anxiety and depression were −0.015 and −0.052 respectively, indicating that non-poor household status reduces women's anxiety and depression. It implies the difference in risks of anxiety and depression that would be observed if everyone in the population were from non-poor households, versus if everyone in the population were from poor households were 1.5 % and 5.2 % respectively. The average treatment effect on treated (ATT) result showed that women from non-poor wealth status households reduced the risk of anxiety and depression by 1.1 % and 9.2 % respectively among treated groups.
Conclusion
This study evidenced that causal relationship between household wealth status and common mental health conditions as such anxiety and depression. This suggests, it is better to focus on improving the wealth status of households to enhance the mental health of reproductive-age women. By understanding the multidimensional aspects of poverty and their links to mental health, stakeholders can create more effective strategies to support affected individuals and communities. This can contribute to breaking the cycle of poverty and improving overall well-being.
... Morduch, Rutherford and Ruthven (2009) further buttressed the position when they argued that the level of consumer trust in financial services providers like commercial banks takes a dip at the advent of misinformation and related vices. The fragile environment around which the organizations work is a pointer to the need to deter guard against complacency and enforce the requisite consumer education standards (Morduch, Rutherford and Ruthven, 2009). This best serves the interests of the industry and all the players in totality. ...
Background: In many jurisdictions, consumer protection law has not been enacted despite the financial services industry's development. This means that in order to boost client confidence and promote the adoption of innovative products, financial services clients must have access to fundamental protections. The prevalence of uninformed customers who rely on financial institutions for their information has led to a rise in the misuse of consumer confidence. Abuse by banks and its marketers, such as imposing exorbitant charges on clients' accounts without providing formal advice, is becoming more widespread. The purpose of the study was to ascertain the measures taken by the Consumer Federation of Kenya to ensure adequate access to information by Kenyan commercial banks customers in an effort to ensure their protection. approach was taken to get in touch with the COFEK staff. Methodology: Questionnaires were utilized in the study to collect data. Both inferential and descriptive statistics were used to analyze the data. Version 22 of the Statistical Package for Social Sciences (SPSS) was employed. Frequency tables, percentages, and relevant statistical descriptions were used to display the data. Results: Most of the respondents were fairly aware of the consumer education activities carried out by the protection agency in commercial banks. Consumer education had a significant coefficient (p-value = 0.0001; β = 0.469) according to the data analysis. Consumer education is statistically significant in ensuring consumer protection. Conclusion: COFEK should enhance the sensitization programs put in place for clients with a view of making them more informed. Public drives to raise the awareness levels should be carried out.
... Demirguc-Kunt et al. (2015) have criticised the nature of institutional characters of banking sector, that is, accessibility of appropriate financial services to adult members in a regulated environment. Financial inclusion has immense potential to promote poverty reduction strategy and also has ample scope for poverty reduction if duly accomplished by responsible authorities (Collins et al., 2009). Researchers have opined that there have been significant contributions to establish a link between the micro-and macro-economic structure of a nation by affecting the financial development indices 1 when vulnerable gaps are financially included (Beck et al., 2000;Clarke et al., 2006;King & Levine, 1993). ...
Financial inclusion provides the legitimate provisions of basic banking services with adequate financial securities to the unbanked population at a reasonable cost. Since the early decade of the 20th century, the cooperative system has been engaged to percolate financial inclusion in various strata of our society. Several initiatives regarding financial inclusion have been implemented in the post-independence period; however, the Pradhan Mantri Jan-Dhan Yojana (PMJDY) 2014 has been considered as one of the most fruitful and effective initiatives by the Government of India for opening no-frill bank accounts with zero balance facilities for financially excluded people in our country, and the cooperative banks have been playing a vital role in the process of implementing the said Yojana. The present study, based on Hooghly District Central Cooperative Bank (HDCCB) and Burdwan Central Cooperative Bank (BCCB) of West Bengal, has comprehended to investigate the role of the DCCBs in the process of financial inclusion with respect to a number of financial operations and annual changes of savings accounts over the second decade of the 21st century. The study has identified statistically significant segments of the financial operations. Those segments are consequences of several fluctuations in financial operations due to the changes in banking policy, implementation of PMJDY, demonetisation, loss of agriculture production, adverse effects of COVID-19 and also the national economic downturn. Finally, it has been observed that the implementation of PMJDY significantly gave rise to the business of the HDCCB and also acted as a threshold point of financial inclusion than its counterpart in the Burdwan district of West Bengal.
... For resource-poor smallholders in the tropics, cheap artisanal methods such as the "Kon-Tiki" flame curtain kilns are probably the most feasible for producing biochar in the foreseeable future [4]. Soil improvements in the longer term may not be a strong enough incentive for biochar making due to insecure land tenure arrangements and hand-to-mouth existence [5]. Carbon credits could create a more direct incentive for smallholder farmers to produce biochar, especially as a complement to the potential productivity benefits [1,6]. ...
Simple and low-cost flame curtain (“Kon-Tiki”) kilns are currently the preferred biochar technology for smallholder farmers in the tropics. While gas and aerosol emissions have been documented for woody feedstocks (twigs and leaves) with varying moisture contents, there is a lack of data on emissions from other types of feedstocks. This study aims to document the gas and aerosol emissions for common non-woody feedstocks and to compare emissions from finely grained, high-lignin feedstock (coffee husk) with those from coarser, low-lignin feedstocks (maize cobs, grass, sesame stems). Throughout each pyrolysis cycle, all carbon-containing gases and NOx were monitored using hand-held sensitive instruments equipped with internal pumps. Carbon balances were used to establish emission factors in grams per kilogram of biochar. The resulting methane emissions were nearly zero (<5.5 g/kg biochar) for the pyrolysis of three dry (~10% moisture) maize cobs, grass, and a 1:1 mixture of grass and woody twigs. For sesame stems, methane was detected in only two distinct spikes during the pyrolysis cycle. Carbon monoxide (CO) and aerosol (Total Suspended Particles, TSP) emissions were recorded at levels similar to earlier data for dry twigs, while nitrogen oxide (NOx) emissions were negligible. In contrast, the pyrolysis of finely grained coffee husks generated significant methane and aerosol emissions, indicating that technologies other than flame curtain kilns are more suitable for finely grained feedstocks. The emission results from this study suggest that certification of biochar made from dry maize, sesame, and grass biomass using low-tech pyrolysis should be encouraged. Meanwhile, more advanced systems with syngas combustion are needed to sufficiently reduce CO, CH4, and aerosol emissions for the pyrolysis of finely grained biomasses such as rice, coffee, and nut husks. The reported data should aid overarching life-cycle analyses of the integration of biochar practice in climate-smart agriculture and facilitate carbon credit certification for tropical smallholders.
... 80,77% sont également membres d'une tontine ; et plus grave encore, 40,77% des membres de la COOPEC continuent à faire recourt à la Banque Lambert pour s'endetter malgré son taux d'intérêt exagéré allant jusqu'à 50% le mois. Ces résultats viennent appuyer ceux de Ngah Otabela (2020), Collins et al (2009) et de Briey (2005. ...
The main concern in this investigation is to analyze the impact of access to microcredit on improving thewell-being of households in the city of Kenge. Specifically, the first step is to identify the determinants ofaccess to microcredit at the COOPEC; Secondly, it is a question of determining the effect of the treatment(access to micro-credit) on the well-being of the beneficiaries' households. To carry out our study, the dataof this study were collected in a blind (accidental) sample of 260 individuals drawn from a population of3.591 members of the Mutual Woman and Man evolve together for the Development of the KwangoMFHPEK. Multiple regression with the Logit model used to identify the determinants of access tomicrocredit and the evaluation of the effects of treatment with the propensity score matching method. The results of the logit regression reveal that gender, socio-professional category (categories employees withsalary or civil servant and trader), having access to a support service are positively associated with thepropensity to access credit at the COOPEC at the 1% threshold. On the other hand, the distance from thelocal market negatively influences the fact of receiving credit at the COOPEC at the 5% threshold. As forthe propensity score matching method, receiving credit positively improves the beneficiary's schooling rate.On the other hand, a negative impact is observed on income as well as food consumption
... 13 To cross-validate the diagnosis of present-bias, behavioral economists could embrace broader perspectives. For example, financial diaries or otherwise detailed accounts of household finances such as in Collins et al. (2009) can provide insights into households' spending patterns and, if households planned to save but did not follow through on their plans, show that expenditures out-competed saving goals. In this exercise, sociocultural knowledge could help to explain which expenditures arise out of social obligations-one may think of spending on traditional festivities, for instance-and which suggest a lack of self-control. ...
The history of development economics has been portrayed as a succession of fads and magic bullets. This study inquires whether behavioral approaches to economic development are destined to become such a fad or whether they have long‐lasting contributions to offer. I first show that behavioral development economics is not a cohesive field with a consensual definition and propose to distinguish three different views of behavioral development economics: the scarcity view, the non‐optimal behavior view, and the psycho‐social‐cultural view. I provide a systematic review of publications in the field of behavioral development economics from 2000 to 2021, distinguishing these three fields. The nonoptimal view has been, by far, the dominant view, and risk and time preferences stand out as the single‐most studied behavioral mechanisms. Finally, I argue that the sub‐field's ability to advance the understanding of behavior relevant to the persistence or alleviation of poverty depends crucially on the inclusion of the psycho‐social‐cultural view. This view has important contributions to offer in terms of (1) the understanding of seemingly nonrational behavior, (2) the identification and measurement of behavioral mechanisms, and (3) the understanding of conditions of external validity, and should be embraced more enthusiastically.
... But they all revolve around the concept of the widespread use of financial services, whether traditional or digital, by the various segments of society, especially the poor, marginalized, and financially excluded. However, there are important variations in term usage a,nd financial inclusion would reduce financial illiteracy and increase the ability to develop, control, and use financial resources effectively for enhancing the security and welfare of the community (Collins, 2009, OECD, 2011. ...
Purpose: The paper studied and analyzed the impact of COVID-19 on digital financial inclusion in developing countries focusing on Sudan during 2018-2021. Method: It is based on the analytical descriptive approach and hypothesizes that COVID-19 was a positive catalyst for developing and promoting digital financial services in developing countries. Data were collected from the WHO, WB, IMF, and the CBOS databases. Results: Although the COVID-19 pandemic affected negatively the economies of developing countries, it helped increase demand for digital financial services and promoted financial inclusion. The study recommends policymakers and regulators in developing countries activate partnerships between banks and telecom companies leading to removing the barriers to financial inclusion (weakness of infrastructure for digital operation, high operation cost, rigidity in KYC procedures concerning opening new bank accounts, and fear of dealing with modern Fintech). Originality/relevance: The paper highlighted the financial services situation in developing countries and the importance of developing and benefiting from financial technology to enhance digital financial inclusion, especially in the wake of the COVID-19 pandemic.
... These limitations hinder the development of sustainable activities to meet essential needs, exacerbating mass unemployment and economic stagnation. A substantial portion of the population remains excluded from traditional financial services provided by commercial banks, which historically dominated the sector before the emergence of microfinance institutions (MFIs) and fintech companies (Collins 2011;Arp et al., 2017). Approximately 1.4 billion adults globally are still unbanked (Demirg€ uç-Kunt et al., 2022). ...
This article highlights the determinants of financial inclusion within the West African Economic and Monetary Union (WAEMU), focusing on the moderating role of the male/female entrepreneurial rate. To this end, we collected quantitative data for the eight member countries from 2010 to 2020 and used a panel model to determine if total financial inclusion service points was influenced by the supply of service points of banks, MFIs, or e-money, after controlling for public governance and investment rate and whether the rate of female or male entrepreneurship moderates this relationship between the supply of banking, microfinance or e-money providers and total financial inclusion service points. We also check if the growth of the different service providers is impacted by competition from each other. Finally, we check whether there is reverse causality: whether female or male entrepreneurship is impacted by the provision or any specific financial service. Our analysis finds that e-money service providers have grown exponentially, banking service points modestly, while microfinance service points have reduced in the region. Our regression results confirm that e-money services positively impact total financial inclusion, unlike banks and MFIs, which have no significant impact. Using interactive variables, we find that male entrepreneurs tend to enhance the relationship of banking and e-money services to total financial inclusion. On the other hand, women's entrepreneurship reduces the relationship between microfinance and e-money services providers to total financial inclusion. Our check for reverse causality shows that the male and female entrepreneurship rates are affected negatively by microfinance service provision.
... It appears that husbands hold significantly more decision-making power with respect to health and education expenses, whereas women participate on an equal footing in decisions pertaining to food expenditures [9]. Large-scale investments, such as health (about 20% of monthly household incomes of sampled households) and offspring's school fee payments, represent costly life-cycle expenditures for parents (Collins et al., 2009). This suggests that costlier investment decisions are taken by the husband while expenditures related to food or the homestead are taken jointly. ...
Purpose
Female smallholder farmers in low-income countries face barriers to accessing capital and commodity markets. While agricultural cooperatives provide services that contribute to the income and productivity of small-scale producers, evidence of cooperatives' social and economic empowerment of female smallholders remains limited. We apply Sen's capability approach to female entrepreneurs' socioeconomic empowerment to examine whether women's participation in a coffee and microfinance cooperative from rural western Uganda benefits their social and economic position within their household. First, we study the relationship between women's cooperative participation and their household coffee sales and savings. Second, we investigate the link between women's cooperative participation and their intra-household decision-making and whether the inclusion of the husband in his wife's cooperative strengthens or lowers women's decision-making power.
Design/methodology/approach
We carry out a case study of a hybrid coffee and microfinance cooperative that promotes social innovation through the integration and empowerment of female smallholders in rural Uganda. Using a cross-sectional survey of 411 married female cooperative members from 26 randomly selected self-help groups of Bukonzo Joint Cooperative and 196 female non-members from the identical area, employing propensity score matching, this paper investigates the benefits of women's participation in a coffee and microfinance cooperative in the Rwenzori Mountains of western Uganda. We present and discuss the results of our case study within an extensive literature on the role of institutions in collective action for women's empowerment.
Findings
Our findings provide new empirical evidence on female smallholders' participation in mixed cooperatives. Our results indicate that women's participation in microfinance-producer cooperatives appears to be a conditional blessing: even though membership is linked to increased women's intra-household decision-making and raised household savings and income from coffee sales, a wife with a husband in the same cooperative self-help group is associated with diminished women's household decision-making power.
Research limitations/implications
The focus of this study is on female coffee smallholders in an agricultural cooperative in rural western Uganda. In particular, we focus on a case study of one major coffee cooperative. Our cross-sectional survey does not allow us to infer causal interpretations. Also, the survey does not include variables that allow us to measure other dimensions of women's empowerment beyond decision-making over household expenditures and women's financial performance related to savings and income from coffee cultivation.
Practical implications
Our empirical results indicate that female smallholders' cooperative membership is associated with higher incomes and coffee sales. However, husband co-participation in their wives' cooperative group diminishes wives' decision-making, which suggests that including husbands and other family members in the same cooperative group may not be perceived as an attractive route to empowerment for female smallholders. For these reasons, an intervention that encourages the cooperation of both spouses and that is sensitive to context-specific gender inequalities, may be more successful at stimulating social change toward household gender equality than interventions that focus on women's autonomous spheres only.
Originality/value
While the literature thus far has focused on microfinance's potential for women's empowerment, evidence on agricultural cooperatives' affecting women's social and economic position is limited. First, our findings provide novel empirical evidence on the empowering effects of women's participation in a self-help group-based coffee cooperative in rural Uganda. Second, our data allows us to explore the role of husbands' participation in their wives' cooperative and SGH. We embed our hypotheses and empirical results in a rich discussion of female entrepreneurship, microfinance and cooperative literature.
... Access to credit is crucial for entrepreneurs and small businesses, enabling expansion, hiring, and productivity increases (Banerjee & Duflo, 2011). It also plays a critical role in poverty reduction by providing tools to manage financial risks and build assets; savings accounts help individuals accumulate wealth, while access to credit supports investment in income-generating activities (Collins et al., 2009). This empowerment promotes upward mobility and helps break the cycle of poverty. ...
This study explores the impact of financial technology (fintech) on enhancing financial inclusion for unbanked and underbanked populations. It examines the obstacles to accessing financial services and the innovative fintech solutions that address them. Approximately 1.4 billion adults globally remain unbanked, facing challenges such as geographical isolation, socioeconomic status, and gender disparities. Fintech offers a range of digital financial services, including mobile banking, digital payments, peer-to-peer lending, and blockchain solutions, which can enhance financial inclusion by delivering affordable and accessible services to underserved populations. This study also examines financial inclusion in the United States, where millions remain unbanked or underbanked due to cost and limited access to traditional banking services. Through a comprehensive analysis of case studies from countries like Kenya and India, where fintech innovations such as mobile money and Aadhaar-enabled payment systems have significantly increased financial access, the study highlights the transformative impact of fintech on financial inclusion. The study identifies critical challenges in fintech adoption, including regulatory hurdles and digital literacy. It proposes strategies for fostering an inclusive financial ecosystem that leverages technology to promote economic growth and poverty alleviation. By examining these factors, the study concludes that through strategic collaboration and investment in digital infrastructure, fintech can play a pivotal role in achieving universal financial inclusion, contributing to broader economic development and social equity.
... But they all revolve around the concept of the widespread use of financial services, whether traditional or digital, by the various segments of society, especially the poor, marginalized, and financially excluded. However, there are important variations in term usage a,nd financial inclusion would reduce financial illiteracy and increase the ability to develop, control, and use financial resources effectively for enhancing the security and welfare of the community (Collins, 2009, OECD, 2011. ...
... By reducing inequality and strengthening economic resilience, it contributes significantly to economic stability (BAM, 2021;WB, 2011;OECD 2019;IMF 2022); • In addition, the reduction of socio-economic disparities is fostered by financial inclusion, which offers equitable access to financial services to the entire population. This process helps to reduce wealth gaps between different segments of society, leading to a more equitable distribution of economic resources (BAM, 2021;Collins et al. 2009;Karlan, 2011;Piketty, 2020;Beck et al., 2008); • Furthermore, increased accessibility to financial services fosters innovation in the financial sector, leading to the development of new products and services better adapted to consumer needs. This expansion also strengthens the competitiveness of the financial sector by encouraging the creation and continuous improvement of offerings, enabling a more effective response to market developments (BAM, 2021;Qamruzzaman, 2023;Ezzahid, 2017;Beck et al., 2008); • In addition, access to formal financial services, such as bank accounts, enhances financial security by securing savings and transactions, thereby reducing the risks inherent in using informal financial services (BAM, 2021. ...
p>This study examines the impact of digital finance on financial inclusion in Morocco. Adopting a quantitative methodology, the study is based on data collected from 454 individual bank customers and data analysis is carried out using structural equation modeling. We examined the relationships between digital finance and users' access, quality, use and financial well-being. The results indicate that digital finance significantly enhances these aspects, thereby facilitating individual inclusion. The study highlights the importance of supporting financial innovation while ensuring consumer protection and the inclusion of vulnerable populations. Implications for policymakers and financial sector players are discussed, highlighting the importance of inclusive strategies to maximize the benefits of digital finance.
JEL: F21, F43, O43, O47, O55
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... Irresponsible credit card usage can lead to a challenging debt burden. High levels of household indebtedness can harm individuals and families, leading to financial stress, limited access to essential goods and services, and even bankruptcy (Vincent & Cull, 2011). Financial inclusiveness, characterized by the accessibility and availability of financial services to all population segments, has gained significant attention as a catalyst for economic growth and poverty reduction (Richard, 2018;Demirgüç-Kunt et al., 2018). ...
Purpose: In recent years, policymakers and researchers have been increasingly interested in understanding household indebtedness. This study used survey data from Trincomalee and Jaffna districts to explore how financial inclusiveness affects household indebtedness.Design/Methodology/Approach: Likewise, this investigation employed data on penetration, barriers, and usage of financial services to construct a comprehensive index, amalgamating scores from each aspect to gauge overall financial inclusion. 200 responses were obtained through convenience from households in Trincomalee and Jaffna districts.Findings: The researcher conducted regression analysis and found a significant positive relationship between financial inclusiveness and the dependency ratio, a negative marginal relationship with debt performance, and no relationship with the consumption yield balance. The study also revealed that financial inclusion significantly impacts household indebtedness and identified three influencing dimensions. Moreover, they observed that financial literacy has dual effects, with financially literate individuals displaying better market behavior, while financially illiterate individuals accumulate more debt due to income shocks. The study aims to fill the literature gap and contribute to understanding the financial landscape of a developing nation like Sri Lanka.Originality: The study, which focuses on the Sri Lankan districts of Trincomalee and Jaffna, offers context-specific insights into the relationship between financial inclusion and family debt in a developing country.
... While this picture of unscrupulous MFIs taking advantage of gullible borrowers may have some basis in reality, this certainly cannot represent the general picture, considering what we know about the financial decisionmaking acumen of poor households. Evidence shows that while the poor may face many constraints, of both wealth and knowledge, within those constraints, the majority of them appear to be capable of making quite sophisticated decisions on financial matters (Collins et al., 2009). If such households decide to engage in overlapping borrowing, they would normally have a rational basis for doing so. ...
Overlapping borrowing – i.e., the practice of taking new loans before old loans have been fully repaid – has become an important phenomenon in the microcredit sector in many developing countries, including Bangladesh. This paper examines the rationale for overlapping and investigates its short‐term and long‐term consequences by using a panel data set that is representative of Bangladesh as a whole. The study finds that it is useful to distinguish between two broad groups of overlapping borrowers who differ in terms of both the rationale of overlapping and its consequences. The first group – consisting of more than half of all overlapping borrowers – uses it as a promotional strategy, to improve their economic conditions without incurring a sharp discrete jump in debt burden. The other group uses it as a coping strategy, to deal with contingencies that compel them to take loans of a non‐productive nature, again by avoiding a sharp discrete jump in the debt burden. Econometric analysis, allowing for the possibility of endogeneity bias, shows that the first group is able to achieve stronger financial viability in the long run in comparison with non‐overlapping microcredit borrowers. The second group, in contrast, does not enjoy any significant improvement in their living conditions, but they are able to stave off any decline that otherwise might have befallen them in the face of shocks. Thus, both groups succeed in their respective goals, which are promotion for the first group and protection for the second. Microcredit has always had this duality of promotion and protection; overlapping borrowing serves to strengthen these functions of microcredit.
... Findings showed that spending influence on health was quite small. Collins et al. (2009) observed that households have utilized different kinds of informal monetary instruments annually. The cash turnover in the course of these instruments was considerable (77-300%), as compared to the final earnings of persons. ...
The research highlights the crucial role of accessible financial services and robust financial systems in enhancing human development outcomes, offering valuable insights for policy-makers aiming to foster inclusive economic growth. This research makes an effort to highlight that financial inclusion and financial development with other major factors determine human development in some selected Asian economies. The authors make use of panel data from 8 Asian nations for the year 2005 to 2018. The dependent variable is the human development index. However, financial inclusion, financial development, urban population, and general government final consumption expenditure are taken as explanatory factors in this analysis. Fixed effect results show that financial inclusion with financial development, urban population, and general government final consumption expenditures have enhanced the human development of Asian countries. The study findings recommend for maximum financial approach and financial amenities in improving the human development of nations. There is a dire need for more improved quality of education for high living standards and development.
... Collins and his colleagues are esteemed methodologists in the realm of financial diaries. Consequently, we leaned on the research they conducted as a foundation for our approach (Collins et al., 2009). To facilitate querying financial diaries, we formed a 'representative' sample of nine households, utilizing income level and ethnicity as sampleforming variables considering local context. ...
... In order to reduce the cost of accessing financial resources for all sectors of society to an affordable level, the United Nations first put forward the concept of inclusive finance in the International Year of Microcredit in 2005. Based on the principles of poverty alleviation and business sustainability, inclusive finance is committed to providing impoverished people with equal financial rights (Beck et al., 2010;Collins et al., 2009;He & Kong, 2017). With the development of financial technology (FinTech) and digital information technology, digital inclusive finance has broken through spatial restrictions and further improved the precision of inclusive financial empowerment . ...
How to govern relative rural poverty is the key and difficulty in eliminating poverty and achieving common prosperity in China. With the rapid development of digital economy, digital inclusive finance is playing an increasingly fundamental role in poverty alleviation. As an important new financial form, whether and how digital inclusive finance affects relative rural poverty is not yet known. Based on new economic geography, this paper empirically tests the direct and spatial impacts of digital financial inclusion on relative rural poverty alleviation by constructing spatial econometric models and using panel data from 31 provinces (autonomous regions and municipalities directly under the central government) in China from 2012 to 2019. The study found that there is a significant positive spatial correlation in relative rural poverty; the development of digital inclusive finance has a significant inhibitory effect on relative rural poverty. Meanwhile, the development of digital inclusive finance in the local province also has a negative spatial spillover effect on rural relative poverty in surrounding areas. Therefore, it is necessary to boost the development of digital inclusive finance, improve the coordination of inclusive finance between regions, and promote inter-regional economic cooperation in the future. Poverty alleviation remains a challenge in the world, especially in developing countries. Digital inclusive finance, which is a new form of inclusive finance and digital economy widely applied in China, could play an increasingly fundamental role in poverty alleviation in rural areas. In this study, a spatial econometric model (SAR) is constructed based on the new economic geography, and the digital financial inclusion index is integrated with macro-economic data at a provincial level in China from 2012 to 2019. The direct and spatial impacts of digital inclusive finance on poverty reduction in rural areas were accessed using the developed model. Results show that digital inclusive finance can significantly reduce relative poverty in rural areas in China. More importantly, it is indicated that there is a significant positive spatial correlation in relative rural poverty, and digital inclusive finance has a negative spatial spillover effect on relative rural poverty, which is supported by a series of endogeneity and robustness tests, such as substitution of relative poverty, replacing models, and using alternative specifications. Recommendations on implementations in poverty alleviation are proposed based on the results of this study. This paper further complements the hot research field on finance development and income inequality. Our findings offer insights into the development of inclusive financial policies for relative rural poverty alleviation in other countries, especially in developing countries with similar backgrounds to China.
... But they all revolve around the concept of the widespread use of financial services, whether traditional or digital, by the various segments of society, especially the poor, marginalized, and financially excluded. However, there are important variations in term usage a,nd financial inclusion would reduce financial illiteracy and increase the ability to develop, control, and use financial resources effectively for enhancing the security and welfare of the community (Collins, 2009, OECD, 2011. ...
Purpose: The paper studied and analyzed the impact of COVID-19 on digital financial inclusion in developing countries focusing on Sudan during 2018-2021. Method: It is based on the analytical descriptive approach and hypothesizes that COVID-19 was a positive catalyst for developing and promoting digital financial services in developing countries. Data were collected from the WHO, WB, IMF, and the CBOS databases. Results: Although the COVID-19 pandemic negatively affected the economies of developing countries, it helped increase demand for digital financial services and promoted financial inclusion. The study recommends policymakers and regulators in developing countries activate partnerships between banks and telecom companies leading to removing the barriers to financial inclusion (weakness of infrastructure for digital operation, high operation cost, rigidity in KYC procedures concerning opening new bank accounts, and fear of dealing with modern Fintech). Originality/relevance: The paper highlighted the financial services situation in developing countries and the importance of developing and benefiting from financial technology to enhance digital financial inclusion, especially in the wake of the COVID-19 pandemic.
... Another study carried out in South Africa (Dean Karlan & Jonathan Zinman, 2010) found that credit increased satisfaction in terms of increased food consumption and the social status of borrowers. (Bauchet et al., 2011) found financial services to positively affect retirement preparedness and subsequently discovering resonance with the financial diaries of (Collins et al.., 2009). This found that low-income families in developing economies utilized an assortment of mechanisms for savings and borrowing to build lump sums of money necessary to address their life cycle needs. ...
The last decade has witnessed significant research interest in the area of financial literacy with specific attention on poverty. However, based on evidence of over 80 papers published since 2014 by the Consultative Group to Assist the Poor, it was revealed that there is no significant comprehensive explanation of how the usage of financial services improves people’s financial satisfaction at retirement. To this effect, this study sought to examine the extent to which the usage of both formal and informal financial services affects the retirement preparedness of people engaged in the informal sector of Cameroon. In light of this, the study aimed at justifying the continuous utilization of informal financial services at the expense of formal financial services even when financial service users have access to formal financial services. The study examined individual levels of investment literacy, cash-flow management literacy, credit management literacy, and the usage of formal and informal financial services. The study used the geographical clusters to proportionately select 400 economically active users of financial services from the seven sub-divisions of Yaoundé. Survey data were quantitatively analyzed to test the statistical relationships using the Covariance-Based Structural Equation Model [CB-SEM] with the aid of SPSS and AMOS 24 statistical packages. Findings indicated that the usage of formal financial services and informal financial services hace positive significant statistical effects on retirement preparedness. Also, the study finds that the usage of formal financial services and informal financial services has positive significant mediating effects on financial literacy and retirement preparedness. The study thus proposes the implementation of a dualistiec financial inclusion model that recognizes that both the formal and informal financial services are beneficial in the improvement of individual’s retirement preparedness in the informal sector of Cameroon and as well as in the context of developing countries.
... But, over time, the poor also need voluntary savings products because the substitution of voluntary savings products in the community tends to be risky (Karlan et al., 2014), the poor need them as an investment tool as well as a safety net when shocks happen (Grosh & Somolekae, 1996) and to encourage borrowers to pay back on time (Montgomery, 1996). Other studies also demonstrate that not only can the impoverished save, but they also have a desire to do so (Collins et al., 2009). ...
This study investigates the effect of competition and the moderating role of voluntary savings on the outreach and sustainability of Microfinance Institutions (MFIs). The study uses data from 39 countries and 609 MFIs from 2004 to 2018. Unit of analysis in this study includes all MFIs in the Mix Market database. It uses Boone Indicator to measure competition. In addition, this study uses the random effects model to regress the model. We find that competition corresponds with decreased outreach and sustainability, but the value is insignificant. The first research question is how competition affects MFIs' outreach and sustainability, and the second research question is whether voluntary savings can work as a moderating variable in the relationship between competition and MFIs' outreach and sustainability. Findings of this study provide guidance to MFIs and regulators regarding the ideal form for MFIs whether they should prioritize lending or expand their services to include voluntary savings.
... the trend toward online banking, Vines et al. (2014) stress that digitalization can open new opportunities for these individuals, but there is also the danger of making existing practices impossible. Similarly, Collins et al. (2009) argue that IT could support the money practices of low-income individuals in the US but that we must prevent deepening the digital divide in that context. In this regard, Muralidhar et al. (2018) highlight that people use a mix of paper and digital artifacts to organize their financial affairs. ...
The digitization of financial activities in consumers' lives is increasing, and the digitalization of invoicing processes is expected to play a significant role, although this area is not well understood regarding the private sector. Human-Computer Interaction (HCI) and Computer Supported Cooperative Work (CSCW) research have a long history of analyzing the socio-material and temporal aspects of work practices that are relevant for the domestic domain. The socio-material structuring of invoicing work and the working styles of consumers must be considered when designing effective consumer support systems. In this ethnomethodologically-informed, design-oriented interview study, we followed 17 consumers in their daily practices of dealing with invoices to make the invisible administrative work involved in this process visible. We identified and described the meaningful artifacts that were used in a spatial-temporal process within various storage locations such as input, reminding, intermediate (for postponing cases) buffers, and archive systems. Furthermore, we identified three different working styles that consumers exhibited: direct completion, at the next opportunity, and postpone as far as possible. This study contributes to our understanding of household economics and domestic workplace studies in the tradition of CSCW and has implications for the design of electronic invoicing systems.
... This theory emphasizes understanding the demand for financial services from marginalized populations. It highlights the importance of understanding the specific needs and preferences of potential users and designing appropriate products and services to meet their requirements (Collins, et al., 2009;. It also means overcoming barriers like awareness, low-income, literacy, trust and cost issues (Kumar, 2019). ...
Financial inclusion, characterized by access and usage of formal financial services, is a critical driver of economic development and poverty reduction. In Nigeria, a country with a large population of unbanked and underbanked individuals, adoption of Digital Financial Services (DFS) presents a promising avenue for expanding financial inclusion among low- income households. This study focused on evaluating the effectiveness of DFS for promoting financial inclusion among low-income households in Jigawa State, North-West Nigeria. Using a mixed-methods research approach, this study comprehensively assessed the impact of DFS on financial inclusion indicators. The research draws from a representative sample of low- income households in Jigawa State, examining utilization of DFS platforms, perceptions of the benefits and challenges associated with these services. Findings indicate notable increase in financial inclusion among low-income households in Jigawa State following the introduction of DFS. Factors contributing to this positive trend include improved convenience, reduced transaction costs, and increased financial literacy. However, challenges related to digital literacy (complexity) and trust in digital platforms (perceived risk) persist and need to be addressed to maximize the impact of DFS. This research contributes to the ongoing discourse on financial inclusion and digital financial services by providing empirical insights specific to the Jigawa State context. The outcomes of this study are expected to inform policymakers, financial institutions, and DFS providers on strategies for further enhancing the reach and effectiveness of digital financial services in promoting financial inclusion among low-income households not only in Jigawa State but also in similar regions across Nigeria and beyond.
... The positive association between urban residence and MoMo adoption supports the findings of McKay and Kaffenberger (2013), who found adoption of MoMo to be higher in urban areas than rural areas. This is because the relatively high concentration of financial institutions in the urban areas offers residents easier opportunities to become financially included (Collins et al., 2009). Balan et al. (2009) attributed the low adoption rate in rural areas to structural and technical rigidities such as lack of network coverage, which is one of the main facilitating conditions necessary to influence adoption. ...
Microfinance plays a critical role in alleviating rural poverty, acting as a tool for financial inclusion and socioeconomic development. The provision of small-scale financial services such as loans, savings, and insurance to underserved populations, particularly in rural areas, has been shown to empower individuals, especially women, and stimulate local economies. This paper investigates the significance of microfinance in reducing poverty in rural regions by analyzing various microfinance institutions (MFIs) and their impact on rural communities. Through a comprehensive review of literature, research methodology, data analysis, and policy recommendations, this study aims to provide insights into how microfinance contributes to poverty reduction and highlights the challenges faced in its implementation.
Entrepreneurs, especially in developing societies, which include many Muslim countries among their fold, face a herculean task in up-scaling their businesses due to a lack of capital to procure relevant assets to grow their businesses. The world Islamic banks’ competitiveness report (2016) identified poor financial inclusion as one of the critical factors responsible for the uneven distribution of wealth in the Muslim world. This study presents the Murābaḥah-Taʻāwun financing product as an innovative addition to the range of financial products available on the Islamic banking shelf to reduce the incidence of poverty. Murābaḥah-Taʻāwun is operationalized where a group of entrepreneurs contribute funds together under a recognized Islamic bank while allowing every partner access to the fund on a rotational basis for the purchase of an asset according to a pre-defined arrangement. The study highlighted the importance of Murābaḥah-Taʻ''āwun as an Islamic financial contract by reviewing relevant extant literature. The proposed product shows that greater financial inclusion can be achieved without recourse to riba and thus will reduce poverty among Muslims. Keywords: Murābaḥah Ta'ʻāwun, Entrepreneur, Islamic Banking, Poverty, Financial Inclusion.
Rule-breaking has been a prominent topic in entrepreneurship research. There are widely held beliefs in society and by researchers that entrepreneurial rule-breaking is dysfunctional and has roots in deviance. Such beliefs and assumptions are problematic, because the resultant fallacy is that the behaviour from which strategic advantages, entrepreneurial innovation, creation of consumer surplus and social welfare, and progressive institutional betterments stem is underlied by nonconformity, risk-taking, self-enhancement, and other traits that are regarded as deviant. This thesis investigates an under-researched aspect of entrepreneurial rule-breaking (entrepreneurial rule-breaking) which is posited to be stemming from rationality and functional traits and can have positive impacts on entrepreneurs and society. It has advanced the knowledge of entrepreneurial rule-breaking in numerous ways. The first paper was a purely conceptual paper whereby a morally neutral definition of entrepreneurial rule-breaking was proposed based on the nature of its functionality (i.e., alleviating the regulating power of formal rules) along with an integrative entrepreneurial rule-breaking theory centring on a novel cognitive construct—constructive rule beliefs .
Based on democratic values stemming from cognitive schemas, constructive rule beliefs denotes peoples’ general beliefs about the purpose, legitimacy, and instrumentality of formal rules, and about the self in relation to rules, and was argued to be a cause of rule-breaking, which enhanced the likelihood of rule-breaking in the context of various contextual triggers. The second paper was a scale development paper which also served to assess various predictions stemming from the first paper. Using exploratory factor analysis, a constructive rule beliefs measure was developed. A two-factor structure emerged and the two factors were termed rule relativity beliefs (F1) and rule purpose beliefs (F2). Empirical evidence supported that constructive rule beliefs was a meaningful cognitive construct, and rule relativity beliefs was predictive of goal-directed entrepreneurial rule-breaking.
The third paper provided the primary test of the core theoretical proposition from the newly-proposed entrepreneurial rule-breaking theory. Based on a 2x2 between-subjects experimental design, the third paper tested the causal relationships between entrepreneurial rule-breaking and rule breaking behavior related to two hypothetical scenarios (constructive rule beliefs and entrepreneurial status). By experimentally manipulating constructive rule beliefs, it was found that constructive rule beliefs had a casual influence on participant rule-breaking tendencies when rule-breaking was clearly conducive to entrepreneurial goals. No relationship was found between entrepreneurial status and entrepreneurial rule-breaking. These findings support that constructive rule beliefs has a causal impact on entrepreneurial rule-breaking and can stem from rationality and functional traits—at least in situations whereby rule-breaking may assist with goal attainment. In doing so, they also challenge the widely-held beliefs that entrepreneurial rule-breaking is based on deviance.
Through constructive rule beliefs and the integrative entrepreneurial rule-breaking theory, this thesis provides evidence for a novel potential cognitive driver of entrepreneurial rule-breaking which is functional and can be beneficial to entrepreneurs and society. Future research can build on the initial work and findings in this thesis to provide further insight into the complex and fascinating phenomenon of rule-breaking in entrepreneurship and in other contexts.
The role of fintech in supporting financial inclusion has gained momentum among international bodies. The UN sustainable development agenda of 2030 and the G20 document on digital financial inclusion key principles both stress the need to use fintech to reduce financial exclusion and to enhance income equality. The debate around financial inclusion has increased in the past 2 years, especially with the crisis of Covid-19. The pandemic accelerated the development of Morocco’s digital financial environment, with government and private firms deploying fintech tools for payments and other financial transactions. This chapter has the following purposes: (1) to review the literature that examines fintech as a driver to financial inclusion, (2) to investigate critical barriers that prevent some segments of the Moroccan population from accessing financial services while giving indicators that reflect financial exclusion, and (3) to shed light on fintech advances and how the Kingdom of Morocco intends to leverage the contribution of fintech firms in the implementation of its National Financial Inclusion Strategy (SNIF).
Microfinance institutions (MFIs) play a crucial role in improving access to financial services for underserved populations. Capacity-building programs, aimed at enhancing institutional and individual capabilities, are essential in determining the success of MFIs in achieving their developmental goals. This paper assesses the impact of capacity-building initiatives on the performance, outreach, and sustainability of MFIs. Using a mixed-method approach, this paper evaluates the correlation between capacity development programs and microfinance outcomes. It further explores how such programs influence financial literacy, governance, and loan repayment rates.
In the wake of important work done in social history and critical theory, readings of Roman laboring are often decidedly negative, associating it with violence, oppression, and the imposition of social hierarchies on workers. But as today, people also found meaning in their working lives, as jobs shaped the subjectivity of workers across the Roman world. This acknowledgment of the subjective value of work does not negate the innate violence and power imbalances associated with ancient laboring, but rather enables us to offer fresh and, in some cases, reparative readings of how they operate in Roman literature, art, and society. In addition to outlining the structure of the volume, this introductory chapter offers a framework for understanding the relationship between labor and subjectivity in the Roman world, concentrating especially on the capacity of individuals to shape their own working lives.
The aim of the study was to evaluate the role of savings groups in poverty alleviation in rural communities of Zimbabwe during COVID-19, using the Umzingwane district as a case study. An exploratory research design was adopted with the goal of using a qualitative research approach. Data was gathered using interviews and the interviews were administered to the savings group members and savings group committee members drawn for wards 3, 5, and 15 of the Umzingwane district. A purposive sampling technique was adopted. The study revealed that owing to the participation of people in savings groups, savings group members were able to acquire assets such as livestock and household assets. The study found that savings groups have enabled their members to establish income-generating projects even during COVID-19 which are crucial in promoting the ability of members to repay loans, make regular savings, and have access to adequate food for their families. The study revealed that savings group members have established nutritional gardens as a result of their participation, which have improved their food security and access to extra income. The study recommended that non-governmental organizations (NGOs) and the government should strengthen savings groups through the provision of regular training and financial resources and encourage men in the communities to participate in savings group activities. The savings group members should diversify their income sources so as to eliminate poverty.
The aim of the study was to analyse the role of savings groups in promoting the resilience of rural semi-arid regions’ women to drought in Zimbabwe using the Umzingwane district as a case study. The study adopted an exploratory research design as a result a qualitative research method was used. Data was collected using interviews which were administered to savings group members and committee members of savings groups. Purposive sampling technique was adopted. The study revealed that saving groups have been providing adequate loans to members to mitigate the effects of drought except during strict COVID-19-induced lockdown (March to June 2020). The study also found that a savings group in partnership with a non-governmental organisation established a gardening scheme that had solar-powered borehole and drip irrigation. This enabled the members to plant crops throughout the year and have access to water leading to the reduction in distance travelled to access water. The study revealed that training and social networks in savings groups have helped the members with skills and ideas to deal with the effects of disasters such as drought. The study recommended that development partners such as the government and NGOs should ride on savings groups when bringing drought mitigation initiatives to the communities. Savings groups should have access to formal financial products to strengthen resilience to disasters such as drought.
Financial inclusion is often seen by policy makers as a tool for social inclusion, while financial literacy is seen as an important tool to support financial inclusion. Along this logic, financial inclusion and the well-being of spatially segregated, stigmatised and extremely poor groups of society can be supported through the development of financial literacy. In our study, we explore the validity of this chain of logic, building on a long-term collaborative process, based on semi-structured in-depth individual interviews and qualitative observations. Our conclusion is that the above chain of logic (financial literacy → financial inclusion → well-being) reflects a middle-class perspective and as such is rather provincial, as there are a number of subsistence strategies in the communities concerned that cannot be measured and interpreted by conventional approaches to financial literacy. Thus, in order to effectively promote the social inclusion of those concerned, one should focus on the specific social conversion factors, as emphasised by the concept of financial capability, related to segregation, poverty and stigmatisation.
A inovação tecnológica é capaz de transformar não apenas a estrutura de mercado e o grau competitivo das empresas. Também provoca mudanças comportamentais, socioeconômicas e sistêmicas. A ampliação da telefonia móvel no Brasil, por exemplo, auxiliou o aumento da eficiência do sistema financeiro e a redução da exclusão financeira. A mobile network criou um novo ambiente econômico, gerou oportunidades de investimentos para pequenos empreendedores, viabilizou o crédito e o seguro para populações excluídas, e a participação em programas sociais. O novo ambiente econômico gerou incentivos ao desenvolvimento tecnológico, ao surgimento e às interconexões entre novos atores e a complexificação do ecossistema empreendedor/inovador. O sistema financeiro tornou-se mais eficiente. Novos atores e tecnologias reduziram os custos e agilizaram a interação com os clientes, o que modificou acentuadamente os custos operacionais e a forma de operação do setor. O artigo aborda de forma panorâmica a estratégia bem-sucedida dos investimentos tecnológicos no setor financeiro para aproveitar a difusão dos aparelhos celulares no cotidiano do brasileiro.
This study examines significant banking initiatives in Indian microfinance sector with the overarching goal of achieving comprehensive financial inclusion. Globally, financial inclusion has become a key objective for governments and financial institutions, emphasizing the provision of affordable financial services to ensure universal access to fundamental tools for managing lives and enhancing well-being. The microfinance system plays a crucial role in driving the financial inclusion of low-income households, which are usually excluded or underserved by the traditional banking system. Due to RBI roadmap to cover villages with bank branches and other regulations, banks started to pay attention in the microfinance sector with many products and schemes. Likewise, the corporate sector considers microfinance as a mode to fulfill the corporate social responsibility (CSR) and to promote the welfare and economic growth of unbanked and remote areas. Therefore, this study aims to investigate the diverse banking initiatives in microfinance geared towards financial inclusion in India. Notably, no integrated study has been conducted in this domain within the country. Specifically, this research qualitatively evaluates these banking activities and assesses their driving factors.
تهدف الدراسة الى بيان دور التكنلوجيا المالية في تحسين الخدمات المصرفية الشاملة مما يمكن الفئات المستفيدة من مستثمرين وباحثين والفئات الاجتماعية الاخرى من تلبية احتياجاتهم من خلال اقتناء الخدمات الالكترونية , اذ تم تحديد مشكلة الدراسة من خلال التساؤل التالي "هل تنعكس التكنلوجيا المالية بشكل واضح في تحقيق الخدمات المصرفية الشاملة؟" .ومن اجل تحقيق هدف الدراسة والاجابة على تساؤلاتها اختبرت الدراسة في القطاع المصرفي وطبقت الدراسة على عينة من العاملين في فروع مصرف الرافدين العاملة في النجف الاشرف وبحدود (139) موظف باعتماد استبانة عدت لهذا الغرض, وقد تم تحليل النتائج باعتماد البرنامج الاحصائي) (SPSS v24 .وتوصلت الدراسة الى مجموعة من الاستنتاجات كان من اهمها ان المصارف عينة الدراسة تفتقر للبنية التحتية والادوات الفنية التي تمكن التكنلوجيا المالية من تحقيق اهدافها في تقديم خدمات شاملة . وقد قدمت الدراسة مجموعة من التوصيات لعل اهمها لفت انتباه القائمين على ادارة المصارف لدراسة وفهم التكنلوجيا المالية لتوظيف تلك الابتكارات والاستفادة منها في تلبية الرغبات لجمهور الزبائن والمستفيدين
According to past estimates by researchers at the World Bank, more than 2 billion people are exposed to penury—living under $ 2-a-day—in the developing world.
Financial inclusion is a fundamental pillar of development. Access to financial products and services broadens economic opportunities for individuals and firms and helps governments design and deliver transfers more effectively. For policymakers, increasing financial inclusion is a tool to accelerate growth, reduce inequality, and boost productivity for small and medium-sized enterprises. This paper aims to contribute to the literature on the sociodemographic characteristics that increase the barriers to financial inclusion in Mexico and to discuss their policy implications.
The Financial Diaries data-set is a unique, new set of year-long daily income, expense and financial transactions for households from three different areas of South Africa. These data show that over-indebted households (those that spend 20 per cent or more of their gross monthly income on debt) do not fit one homogeneous profile. Formal debt tends to be responsible for over-indebtedness in the urban areas, while in the rural areas the cause tends to be informal debt. In the urban areas high indebtedness is more prevalent among medium-income and high-income households, whereas in the rural areas it occurs at all income levels. High indebtedness in grant-dependent rural households tends to be persistent, whereas in wage-dependent urban households it is often short-lived. These findings present a new financial picture of poor rural populations that is unlikely to be touched by recent policy measures to address over-indebtedness.
The Association for Social Advancement (ASA) of Bangladesh recently topped Forbes magazine's first-ever list of the world's best microfinance banks. This is an extraordinary achievement for an organization that started life as a revolutionary movement aiming to bring a peasant-led government to the newly created and desperately poor South Asian nation of Bangladesh. This book tells the story of how ASA's determined but practical-minded founder and leader, Shafiqual Haque Choudhury, steered his organization through the maze of competing ideas about how best to develop poor countries. The book sets Choudhury's accomplishments in the context of Bangladesh's chaotic but inspiring postcolonial history and is rich in its understanding and descriptions of how ordinary village and slum dwellers deal with the complicated web of politics, international donations, and development expertise. The author's long and intimate knowledge of ASA and of Bangladeshi microfinance makes this one of the best case studies of a development organization available to the general public. Available in OSO: http://www.oxfordscholarship.com/oso/public/content/economicsfinance/9780195380651/toc.html
Most of the empirical tests reject the complete markets hypothesis, but have serious methodological problems concerning the identification of preferences, the direction of the tests and their power. We study the risk sharing and consumption insurance achieved by rural households from three provinces of Pakistan dealing with these methodological problems and taking into account that preferences are heterogeneous. At last, we show that in Pakistan, agricultural contracts play an important role in risk sharing when markets are incomplete since households able to use sharecropping contracts, which permits to share production risks, are better insured.
The transactions and production files are used to create measures of the use of currency and crop inventory as well as changes in real capital assets, livestock, and net indebtedness for three ICRISAT villages in India's semiarid tropics. These asset data are used with income and consumption data to judge the goodness of fit of three models: complete markets or an equivalent set of institutions, exogenously incomplete markets, and endogenously incomplete mechanism design models with moral hazard. The risk sharing apparent in monthly/annual data is achieved by the buffer stocks of currency and crop inventory, and also by community institutions providing credit and insurance, but not at all by the purchase and sale of real capital assets and livestock. Still, by the more exact standards of full econometric tests and a priori plausibility none of the models seems to represent a satisfactory abstract picture. The complete markets model and permanent income/buffer stock model do move us in the right direction, consistent with the data, but are rejected over all. The private information model fits much of the consumption data reasonably well, but it suggests a community control over assets which, though receiving mild support in the data, deserves further consideration. Apparent in the data are salient facts which should be part of subsequent model construction. The relatively rich tend to be high users of crop inventory, and these and other such users of crop inventory are more likely to pass full insurance, permanent income, and private information model tests. The relatively poor tend to be high users of currency, but these and other such users of currency are more likely to fail private information if not other model tests. The villages display both barter and monetary exchange. While virtually all households have access to credit and insurance, the efficiency of the credit/insurance markets varies by land class, it is better for the larger land holders, and varies by village, it is worse for the more traditional village. These village economies also vary in their interaction with the larger national economy. (Copyright: Elsevier)
Using survey data from Nepal, we examine the relationship between proximity to urban centres and the organisation of labour. We show that wards located in and near cities have more diversified and more market oriented activities. This suggests the presence of returns to market specialisation in cities. We also find some evidence of returns to hierarchical specialisation. These effects are felt up to four hours of travel time from large cities. Urbanisation is associated with lower female labour market participation and with a more pronounced specialisation of women either in market-related activities or in strictly home-based chores. Copyright 2005 Royal Economic Society.