Are Deposits a Stable Source of Funding for Microfinance Institutions?

Poor people save. The conventional view is that low-income depositors transact more frequently than holders of larger accounts and are more prone to income disruptions from natural disasters, health issues, crime, and other factors. This perception makes financial institutions stepping into the under-served low-income space worry about whether they can use small deposits to fund their lending operations. But new research finds that under normal circumstances, aggregate balances for low-income accounts move gradually, and they are not prone to abrupt month-by month swings. This should make liquidity management easier because it gives the institutions enough time to adjust to changes in deposit supply over several months.

Bibliographic Details

Main Authors:	Abakaeva, Julia, Glisovic-Mezieres, Jasmina
Language:	English
Published:	World Bank, Washington, DC 2009-06
Subjects:	ASSETS, BANK INDONESIA, BANKS, CHECKS, COMMERCIAL BANK, CONSUMER PRICE INFLATION, CREDIT BANK, CURRENT ACCOUNTS, DEMAND DEPOSITS, DEPOSIT, DEPOSIT BALANCES, DEPOSIT PRODUCTS, DEPOSIT VOLUMES, DEPOSITOR, DEPOSITORS, DEPOSITS, DEVELOPING COUNTRIES, EUROPEAN CENTRAL BANK, FINANCIAL INSTITUTIONS, FINANCIAL MARKETS, FINANCIAL TRANSACTIONS, INCOME, INFLATION, INTEREST COST, INTEREST RATES, LIABILITY, LIABILITY MANAGEMENT, LIQUIDITY, LIQUIDITY CRISIS, LIQUIDITY MANAGEMENT, LOAN, LONG-TERM LOANS, MFIS, MICRO-ENTERPRISE, MICROFINANCE, MICROFINANCE INSTITUTIONS, NATIONAL BANK, NATURAL DISASTER, NATURAL DISASTERS, POLITICAL TURMOIL, PORTFOLIO, REFERENDUM, REGULATOR, REPUTATION, SAVINGS, SAVINGS ACCOUNTS, SAVINGS DEPOSITS, SAVINGS PRODUCTS, SOURCE OF FUNDS, SOURCES OF FUNDS, STATE BANK, STATE BANK OF PAKISTAN, TAX, TERM DEPOSITS, TIME DEPOSITS, TRANSACTION, VOLATILITY,
Online Access:	http://documents.worldbank.org/curated/en/2009/06/11064899/deposits-stable-source-funding-microfinance-institutions https://hdl.handle.net/10986/9494
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