Low-Income Households and Credit: Exclusion, Preference, and Inclusion

1996 ◽  
Vol 28 (8) ◽  
pp. 1345-1360 ◽  
Author(s):  
J Ford ◽  
K Rowlingson
Keyword(s):  
Low Income ◽  
Financial Services ◽  
Economic Life ◽  
Mail Order ◽  
Costs And Benefits ◽  
Financial Exclusion ◽  
Low Income Households

In this paper it is suggested that current debates on financial exclusion are often too narrowly drawn and institutionally focused. As a consequence, less recognition is given to the availability and use of other regulated financial services such as mail order and moneylending. Drawing on data from a number of recent studies, the authors explore the structures and processes involved in the provision and use of these additional credit sources and assess their costs and benefits. It is suggested that alongside institutional exclusion are processes of self-exclusion, and also inclusion. The implications of such credit patterns for social and economic life in low-income communities are raised.

scholarly journals Barriers to Access to and Usage of Financial Services in Ethiopia

2017 ◽  
Vol 7 (1) ◽  
pp. 139 ◽  
Author(s):  
K. Sambasiva Rao ◽  
Andualem Ufo Baza
Keyword(s):  
Low Income ◽  
Financial Services ◽  
Financial Institution ◽  
Fixed Cost ◽  
Physical Point ◽  
Fixed Charges ◽  
Barriers To Access ◽  
Financial Exclusion ◽  
Low Income Groups ◽  
Regulatory Barriers

We study the interplay between financial exclusion and barriers to inclusion. Our model shows that financially excluded individuals are exposed to barriers to inclusion that prohibit their access to financial services even in absence of voluntary exclusion. We call these situation “involuntary exclusion,” since people lack access to and use of financial services due to barriers to inclusion that are otherwise overlooked social exclusion. We show that barriers to inclusion are more likely to occur when lack of access to physical point of financial services, poverty, lack of credit, prohibitive fixed cost of transacting at financial institution, legal and regulatory barriers and low competition among financial institutions. We analyze financial exclusion as a function of barriers to inclusion, examining the trade-off between unbanked adults and barriers to banking. We verify the model’s prediction that financial exclusion is more likely to occur among low income individuals in which assets holdings are low, as well as individuals who are too far away from physical point of access and those individuals who cannot afford bank fixed charges, than others. We also show that individuals are more likely to be financially excluded (relative to others) in low income groups in which barriers to inclusion are more frequent. 

Mobile Security in Low-Income Households' Businesses

2019 ◽  
pp. 576-595
Author(s):  
Bibi Zaheenah Chummun
Keyword(s):  
Low Income ◽  
Financial Services ◽  
Industrial Revolution ◽  
Financial Inclusion ◽  
Services Sector ◽  
Security Breaches ◽  
Fourth Industrial Revolution ◽  
Security Challenges ◽  
Mobile Financial Services ◽  
Low Income Households

A wide range of technologies impinges on all disciplines including financial services in this era of the Fourth Industrial Revolution. The deployment and security of mobile phones have considerably increased financial services access such as mobile money to the low-income households in developing African markets recently. The financial services that were once randomly accessible to those financially excluded have now become a potential pathway to enhance financial inclusion in allowing the low-income households to transact through mobile financial services in a more speedy, reliable, and secure manner. However, many security challenges remain to be addressed to promote a more inclusive mobile financial system. This chapter focuses on mobile devices security landscape and unprecedented security breaches by cyber criminals and how those threats can be mitigated in a view to promote financial inclusion in the mobile financial services sector of emerging African markets in the midst of the Fourth Industrial Revolution.

scholarly journals Legislative and Other Selected Challenges Affecting Financial Inclusion for the Poor and Low Income Earners in South Africa

2020 ◽  
Vol 64 (3) ◽  
pp. 337-355
Author(s):  
Howard Chitimira ◽  
Menelisi Ncube
Keyword(s):  
South Africa ◽  
Low Income ◽  
Financial Services ◽  
Banking System ◽  
Financial Inclusion ◽  
The Poor ◽  
Financial Exclusion ◽  
Relevant Role ◽  
Legislative Framework ◽  
The Government

AbstractThis article discusses the challenges affecting the achievement of financial inclusion for the poor and low-income earners in South Africa. The concept of financial inclusion could be defined as the provision of affordable financial products and services to all members of the society by the government and/or other relevant role-players such as financial services providers. This article identifies unemployment, poverty, financial illiteracy, over-indebtedness, high bank fees, mistrust of the banking system, lack of relevant national identity documentation and poor legislative framework for financial inclusion as some of the challenges affecting the full attainment of financial inclusion for the poor and low-income earners in South Africa. Given these flaws, the article highlights the need for the government, financial institutions and other relevant stakeholders to adopt legislative and other measures as an antidote to financial exclusion and poverty challenges affecting the poor and low-income earners in South Africa.

scholarly journals A Legal Analysis of the Use of Innovative Technology in the Promotion of Financial Inclusion for Low-Income Earners in South Africa

2021 ◽  
Vol 24 ◽  
pp. 1-27
Author(s):  
Howard Chitimira ◽  
Phemelo Magau
Keyword(s):  
South Africa ◽  
Financial Institutions ◽  
Low Income ◽  
Rural Areas ◽  
Financial Services ◽  
Informal Settlements ◽  
Financial Inclusion ◽  
Innovative Technology ◽  
Financial Exclusion ◽  
The Government

The promotion of financial inclusion is important for the combating of financial exclusion in many countries, including South Africa. Nonetheless, most low-income earners living in rural areas and informal settlements are still struggling to gain access to basic financial products and financial services in South Africa. This status quo has been caused by a number of factors such as the absence of an adequate financial inclusion policy, the geographical remoteness of financial institutions to most low-income earners, rigid identity documentary requirements, a lack of access to reliable and affordable Internet connection by low-income earners living in informal settlements and rural areas, a lack of financial illiteracy, the high costs of financial services, unemployment and poverty, over-indebtedness, and cultural and psychological hindrances to low-income earners in South Africa. Consequently, these factors have somewhat limited the access to financial services offered by financial institutions to low-income earners living in rural areas and informal settlements. In many countries, including South Africa, the financial sector is relying on innovative technology, especially in banking institutions, to aid in the offering of financial services to their customers. It is against this background that this article discusses selected legal and related challenges affecting the regulation and use of innovative technology to promote financial inclusion for low-income earners in South Africa. The article further discusses possible measures that could be adopted by the government, financial institutions and other relevant regulatory bodies to promote the use of innovative technology to combat the financial exclusion of low-income earners in South Africa.

scholarly journals Walking a Tightrope: Using Financial Diaries to Investigate Day-to-Day Financial Decisions and the Social Safety Net of the Financially Excluded

2020 ◽  
Vol 689 (1) ◽  
pp. 46-64
Author(s):  
Olga Biosca ◽  
Neil McHugh ◽  
Fatma Ibrahim ◽  
Rachel Baker ◽  
Tim Laxton ◽  
...  
Keyword(s):  
Social Networks ◽  
Low Income ◽  
Financial Services ◽  
Safety Net ◽  
Social Safety Net ◽  
Short Term ◽  
Financial Decisions ◽  
Financial Exclusion ◽  
The Social

Financially vulnerable, low-income individuals are more likely to experience financial exclusion as they are unable to access financial services that meet their needs. How do they cope with economic instability, and what is the role of social networks in their coping strategies? Using financial diaries, we explore the day-to-day monetary transactions (n = 16,889) of forty-five low-to-moderate income individuals with restricted access to mainstream lending in Glasgow, UK, over a six-month period. Our sample includes users of microcredit and financial advice, as well as nonusers of these services. Findings reveal that informal lending to avoid the pernicious effects of short-term illiquidity was pervasive among these individuals. However, taking informal loans often strains valuable social capital and keeps people from building up a formal credit footprint. Our findings suggest that financially vulnerable populations would benefit from policies that focus on alternative financial mechanisms to help stabilize income-insecure individuals in the short-term.

Mobile Security in Low-Income Households' Businesses

2019 ◽  
pp. 683-702
Author(s):  
Bibi Zaheenah Chummun
Keyword(s):  
Low Income ◽  
Financial Services ◽  
Industrial Revolution ◽  
Financial Inclusion ◽  
Services Sector ◽  
Security Breaches ◽  
Fourth Industrial Revolution ◽  
Security Challenges ◽  
Mobile Financial Services ◽  
Low Income Households

A wide range of technologies impinges on all disciplines including financial services in this era of the Fourth Industrial Revolution. The deployment and security of mobile phones have considerably increased financial services access such as mobile money to the low-income households in developing African markets recently. The financial services that were once randomly accessible to those financially excluded have now become a potential pathway to enhance financial inclusion in allowing the low-income households to transact through mobile financial services in a more speedy, reliable, and secure manner. However, many security challenges remain to be addressed to promote a more inclusive mobile financial system. This chapter focuses on mobile devices security landscape and unprecedented security breaches by cyber criminals and how those threats can be mitigated in a view to promote financial inclusion in the mobile financial services sector of emerging African markets in the midst of the Fourth Industrial Revolution.

The Microfinance Promise

1999 ◽  
Vol 37 (4) ◽  
pp. 1569-1614 ◽  
Author(s):  
Jonathan Morduch
Keyword(s):  
Low Income ◽  
Financial Services ◽  
Financial Sustainability ◽  
Costs And Benefits ◽  
Group Lending ◽  
Joint Liability ◽  
The Past ◽  
Poor Households ◽  
Economic And Social Impacts ◽  
Policy Discussion

In the past decade, microfinance programs have demonstrated that it is possible to lend to low-income households while maintaining high repayment rates—even without requiring collateral. The programs promise a revolution in approaches to alleviating poverty and spreading financial services, and millions of poor households are served globally. A growing body of economic theory demonstrates how new contractual forms offer a key to microfinance success—particularly the use of group-lending contracts with joint liability. For the most part, however, high repayment rates have not translated into profits, and studies of impacts on poverty yield a mixed picture. In describing emerging tensions, the paper highlights the diversity of innovative mechanisms beyond group-lending contracts, the measurement of financial sustainability, the estimation of economic and social impacts, the costs and benefits of subsidization, and the potential to reduce poverty through savings programs rather than just credit. The promise of microfinance has pushed far ahead of the evidence, and an agenda is put forward for addressing critical empirical gaps and sharpening the terms of policy discussion.

scholarly journals PERCEPTION TOWARDS BC/BF MODEL AS A SUCCESSFUL AGENT FOR FINANCIAL INCLUSION

2020 ◽  
pp. 1-3
Author(s):  
Manoj Xavier
Keyword(s):  
Economic Growth ◽  
Low Income ◽  
Financial Services ◽  
Critical Role ◽  
Financial System ◽  
Financial Inclusion ◽  
Inclusive Growth ◽  
Financial Exclusion

The concept financial inclusion, the delivery of financial services at affordable costs to low-income segments of society, is a realistic strategy for accelerated economic growth, and plays critical role in achieving inclusive growth. Non accessibility, non-affordability and non availability of formal financial services results in financial exclusion and thereby, vulnerable sections cannot use their own funds in an underdeveloped financial system leading to high cost credit from informal sources and the individuals also pay higher charges for basic financial services. In India the RBI and Government have launched several financial inclusion measures and programs over the last two decades. Among these, BC/BF Model is one of the successful initiatives. This study is an attempt to know the perception towards BC/BF model as a successful agent for financial inclusion among the beneficiaries

Mobile Security in Low-Income Households' Businesses

2018 ◽  
pp. 546-565
Author(s):  
Bibi Zaheenah Chummun
Keyword(s):  
Low Income ◽  
Financial Services ◽  
Industrial Revolution ◽  
Financial Inclusion ◽  
Services Sector ◽  
Security Breaches ◽  
Fourth Industrial Revolution ◽  
Security Challenges ◽  
Mobile Financial Services ◽  
Low Income Households

A wide range of technologies impinges on all disciplines including financial services in this era of the Fourth Industrial Revolution. The deployment and security of mobile phones have considerably increased financial services access such as mobile money to the low-income households in developing African markets recently. The financial services that were once randomly accessible to those financially excluded have now become a potential pathway to enhance financial inclusion in allowing the low-income households to transact through mobile financial services in a more speedy, reliable, and secure manner. However, many security challenges remain to be addressed to promote a more inclusive mobile financial system. This chapter focuses on mobile devices security landscape and unprecedented security breaches by cyber criminals and how those threats can be mitigated in a view to promote financial inclusion in the mobile financial services sector of emerging African markets in the midst of the Fourth Industrial Revolution.

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