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Keynes explained that income was the most systematic determinant of individual (household) saving. Individuals with a low income cannot save. 2.1.3. Myopic Consumers TheoryFunfgeld and Wang (2009) assert that the “Myopic consumers” have integrated financial matters into their life and seem to manage them well. Nevertheless, a weak point is denying the need for precautionary saving, a kind of overconfidence in their future finance. Men are more prone to overconfidence than women, a finding which is reflected in the higher proportion of men. “Myopic consumers” are neither uninterested in financial affairs, nor emotional decision takers. They can benefit from systematic information such as realistic facts about expected consumption after retirement and the need for retirement savings as one’s own responsibility.
9 2.1.4 Saving and Saving Deposit According to Lauchlin, (2004), in macroeconomics, saving is a residual –the difference between consumption and what economists choose to call income, which is also the difference between income and investment, so that savings equals investment. Savings are composed of personal, private and public savings and may be adjusted for net international saving. It will be seen that these various senses of the term have little to do with the deposits of one or another type of institutions. These latter may arise from an excess of current income over consumption, from deposits or instruments of debt previously held elsewhere, and indeed from a variety of sources. They form a portion of debt which is the counter-face of credit. On occasion the State has attempted to increase business savings by reduction of taxes, or personal savings through imposition of taxes for old age benefits. These attempts have rarely been successful in changing the volume of savings to a notable exception has been Singapore where the State ensured that such savings were used in construction. They financed a building program which, in relation to the GNP, was Money and savings probably the largest in the world and with no inflationary effect. Equal sums created as means of payment would have been highly inflationary. 2.1.5. Permanence and Growth Institutions According to Wright, (1999) Permanence and growth institutions tend to encourage the long-term build-up of funds through relatively slow, but steady, saving, and are therefore extremely well suited for addressing longer-term savings needs. While replication and multiplication schemes tend to encourage the rapid accumulation and
10 disbursement of funds and are therefore better suited to meeting shorter-term savings needs. There is increasing evidence that providing client-responsive financial services can both serve the needs of poor people while maintaining or in fact improving the sustainability and profitability of the MFIs. There are no magic formulas for designing appropriate savings products for poor people. There is no substitute for intensive market research and careful product development. But the