Are Deposits a Stable Source of Funding for Microfinance Institutions?
Poor people save. The conventional view is that low-income depositors transact more frequently than holders of larger accounts and are more prone to income disruptions from natural disasters, health issues, crime, and other factors. This perception...
| Main Authors: | , |
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| Format: | Brief |
| Language: | English |
| Published: |
World Bank, Washington, DC
2012
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2009/06/11064899/deposits-stable-source-funding-microfinance-institutions http://hdl.handle.net/10986/9494 |
| Summary: | Poor people save. The conventional view
is that low-income depositors transact more frequently than
holders of larger accounts and are more prone to income
disruptions from natural disasters, health issues, crime,
and other factors. This perception makes financial
institutions stepping into the under-served low-income space
worry about whether they can use small deposits to fund
their lending operations. But new research finds that under
normal circumstances, aggregate balances for low-income
accounts move gradually, and they are not prone to abrupt
month-by month swings. This should make liquidity management
easier because it gives the institutions enough time to
adjust to changes in deposit supply over several months. |
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