Financial Services and Poverty Reduction in Latin America and the Caribbean

The chapter analyzes the specific needs of the poor in terms of the use they give to their savings, such as to pay for life cycle events such as weddings and funerals, as a strategy to cope with risk, and as a way to finance investment opportunities. The chapter presents problems with informal savings arrangements such as rotary credit and savings associations (ROSCAs), savings in-kind, and deposit collectors, and discusses the characteristics needed for a formal savings mechanism that provides welfare benefits such as security and accessibility. The study then presents some challenges and solutions for the expansion of savings for the poor in terms of institutional development, infrastructure, making use of available technology, and the role of donors