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Informal markets: What lessons can we learn from them?

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This policy brief examines the various informal markets that the rural poor have traditionally turned to for their financial needs. For example:

  • Lending and Borrowing among relatives, neighbours and friends
  • The rotating credit and saving associations (ROSCAs)
  • Informal moneylenders
  • Tied credit

Important lessons to be learned from the informal sector include:

  • Building credible long-term partnerships
  • Tailoring financial services to specific demand patterns
  • Knowledge of local economy is important; therefore, so is decentralisation of decision-making
  • Not all financial contracts are self-enforcing and adequate steps must be taken to enforce contract compliance

Document Information

Document Type Document
Author Sharma, M.; Zeller, M.
Year of Publication 2000
Publisher IFPRI
Number of Pages 2 pp.
Edition Rural Financial Policies for Food Security of the Poor: Policy Brief
Region / Country Global /
Primary Language English (en)
Keywords Informal Finance, Informal Sector, Financial Services
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