Handout+Chpt+12+MFI-10 - EEP151/Econ171-Fall 2010 Handout...

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EEP151/Econ171-Fall 2010 Handout for Chapter 12. Financial Services for the Poor (Part 2) Potential Borrower Risk: Project Time to Loan borrower Loan invests unexpected outcome: repay repayment: applies made in project shocks Failure/Success the loan Willing/Unwilling Time line Failure Unwilling to repay Four problems Selection: Monitoring: Insurance: Enforcement: to be solved AS MH MH MH by lender borrower in project in limited in loan implementation liability repayment   Figure 1. The lender problem Internal account: Member savings deposits Individual loans Village Loans to bank members External account: Group loans Loans, grants Figure 2. Village bank Savings Accumulated   savings Time Offer options to induce savings Offer options to restrict dis-savings Safe savings options Time bound deposits Remunerative savings options (interest rates) Purposeful savings accounts (education, retirement) Convenient savings options: proximity, mobile banking Piggybanks (locked savings)
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Handout+Chpt+12+MFI-10 - EEP151/Econ171-Fall 2010 Handout...

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