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I sound like a Planet Money shill on this forum, but I'd recommend listening to a great episode [0] from 2013 which talks about 'folk' banking institutions used

by anitil 8y ago

I sound like a Planet Money shill on this forum, but I'd recommend listening to a great episode [0] from 2013 which talks about 'folk' banking institutions used by people in the US. It takes its information from the US Financial Diaries project [1]. One interesting 'product' I'd never heard of was a savings club where every member contributes $x every month, and every n months you get $x*n. It performs a similar consumption smoothing as a credit product [0] https://www.npr.org/sections/money/2013/06/18/193176928/episode-466-diy-finance https://www.npr.org/sections/money/2013/06/18/193176928/epis... [1] https://www.usfinancialdiaries.org/ https://www.usfinancialdiaries.org/

brianpgordon 8y ago
Do you actually get the prevailing n-month CD rate of interest in that scheme, or is it purely to teach fiscal discipline? What's the point of collectivizing it? And it seems like people poor enough that they can't access traditional banking products would have a real problem with lack of liquidity if they have an emergency and need their savings immediately.
- bsanr2 8y ago
  I think you answered your own question. The "lack of discipline" is not an internal failing, but an externality imposed disproportionately on poor people/PoC. Therefore, a savings product that makes access difficult in most cases but not impossible (for true emergencies), and without onerous penalty should access be necessary, makes its usage more palatable, even with the lack of interest.
- anitil 8y ago
  The episode goes in to this. Typically these are people who would struggle with traditional financial institutions, and so they harness peer pressure as a savings tactic.
jpster 8y ago
Popular in some black American communities. It’s aka a sou-sou. Not sure if there’s an interest payment element. I believe the biggest benefit is the solidarity of doing something (saving money) that’s hard to find discipline for on your own.

by anitil 8y ago

brianpgordon 8y ago

Do you actually get the prevailing n-month CD rate of interest in that scheme, or is it purely to teach fiscal discipline? What's the point of collectivizing it? And it seems like people poor enough that they can't access traditional banking products would have a real problem with lack of liquidity if they have an emergency and need their savings immediately.

bsanr2 8y ago
I think you answered your own question. The "lack of discipline" is not an internal failing, but an externality imposed disproportionately on poor people/PoC. Therefore, a savings product that makes access difficult in most cases but not impossible (for true emergencies), and without onerous penalty should access be necessary, makes its usage more palatable, even with the lack of interest.
anitil 8y ago
The episode goes in to this. Typically these are people who would struggle with traditional financial institutions, and so they harness peer pressure as a savings tactic.

jpster 8y ago

Popular in some black American communities. It’s aka a sou-sou. Not sure if there’s an interest payment element. I believe the biggest benefit is the solidarity of doing something (saving money) that’s hard to find discipline for on your own.