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  Topic Overview
   id: 16428
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   Added: 24 February 2005
   Updated: 23 September 2005
 
Informal mechanisms    
        
Informal Mechanisms
People have been solving their money management problems in diverse ways for a long time. They have invented a variety of solutions to saving and borrowing that do not fall into the sphere of regulated formal institutions and these are known as informal financial service mechanisms. They include savings clubs that people run themselves, savings clubs that are managed by other people, e.g. religious or welfare organisations or paid commercial managers, and informal providers such as money lenders, pawnbrokers or deposit takers.

Informal mechanisms are still the most important in many poor communities and development workers would do well not to dismiss them as inappropriate or exploitative as they are often vital to people’s livelihood strategies. In fact there is now considerable interest in encouraging supplier finance, and user owned and managed groups or self help groups are widely promoted. These mechanisms are particularly important in rural areas where formal financial institutions still have difficulty providing cost effective services.

  
 
A Critical Typology of Financial Services for the Poor  Paper1996   A Critical Typology (en)  
Community Savings Funds: providing access to basic financial services in marginalised rural areas of Mexico  Article2002   Community Savings Funds (en)  
Community-Based Microfinance Models in East Africa  Paper2004   Document (en)  
El Financiamiento Informal en el Perú  Book2001  
Retos del Financiamiento Rural, construcción de instituciones y crédito informal  Book1998  
The poor and their money  Book2001  
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