Informal Savings and Credit Arrangements

One of the most striking features of the informal financial sector is the wide variety of links between lenders, borrowers and savers ranging from simple credit arrangements to complex financial intermediation mechanisms. Thre basic types of informal financial operators can be generally distinguished: individual moneylenders; groups of individuals organized mutually; partnership firms.


  • Non-commercial arrangements
    Lenders - friends, neighbours, relatives
    Borrowers - small farmers, small businesses and households.
  • Commercial credit arrangements
    1. Money-based:
      Lenders - prefessional moneylenders, mobile bankers, private individuals from upper-income groups.
      Borrowers - small farmers, small businesses and households.
    2. Land-based:
      Lenders - landlords, farmer-moneylenders
      Borrowers - tenants, small farmers
    3. Commodity-based:
      Lenders - trader-moneylenders, agricultural input dealers, equipment suppliers, processors (rice millers), produce traders, itinerant traders, market vendors, storeowners.
      Borrowers - small farmers, small businesses and households.


  • Savings arrangements
    Lenders - fixed-fund associations, mutual aid associations, savings clubs.
    Borrowers - small farmers, small businessmen and households, small farmers and households.
  • Combined savings and credit arrangements
    Lenders - informal credit unions, informal savings and loan cooperatives, ROSCAs (and variants).
    Borrowers - small farmers, small businessmen and households.


  • Financial Intermediation
    Lenders - indigenous bankers, pawnbrokers, finance companies, investment companies, leasing companies, hire-purchase companies.
    Borrowers - small businessmen and households.

Germidis, Dimitri, "Interlinking the Formal and Informal Financial Sectors in Developing Countries". Savings and Development. Volume XIV, No.1, 1990.

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