A study on formal financial services for rural small savers
Keywords:
formal financial, rural small savers, self-insuranceAbstract
Formal markets are not interested in ensuring high-risk small savers. The reasons are both, theoretical as well as policy specific. Informal saving, in the form of assets, is readily responsive to high-risk conditions. But an adverse shock reduces the value and makes the terms of trade adverse for them. Secondly, the lumpiness of assets is also another reason why the poor cannot protect themselves easily against adverse shocks. Holding savings as cash in hand or with some trusted person is also not risk-free. In such conditions, small savings are considered as self-insurance and help in stabilizing income in the advent of shock. When all options of savings adopted by the poor are risky, what stops them from going in for formal small savings? Some issues are examined in this article.
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