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Creating Better Portfolio: Core Financial Products for the Poor

Author: Financial Access Initiative, MicroSave
Published: May 12, 2010


"Portfolios of the Poor: How the World’s Poor Live on $2 a Day examines the basic question of how the world’s poorest households survive on such modest incomes. The authors report on yearlong ""financial diaries"" of villagers and slum dwellers in Bangladesh, India, and South Africa-surveys that track penny by penny how households manage their money. The stories of these families are often surprising and sometimes inspiring. Most poor households do not live hand to mouth, spending what they earn in a desperate bid to keep afloat. Instead, they rely upon an array of complex tools, and lead active financial lives because they are poor, not in spite of it. They create “portfolios” that leverage both informal networks and formal institutions to address their immediate and long-term needs. The note explores the financial traits of poor households in terms of cash flows, diversity of loan needs and trade-offs. The poor in order to meet the needs like buying assets, paying for celebrations, and dealing with emergencies get into disciplinary habbits which facilitates accumulation of large lumps of money to deal with emergencies."

Tags: Bangladesh , Microfinance , Market research (qualitative) , Product development , South Asia , MicroSave , Financial diaries , Irregular income , Financial products , Stuart Rutherford , India

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