Reaching the Hard to Reach

Comparative Study of Member-Owned Financial Institutions in Remote Rural Areas

Study Overview

People in remote, rural communities around the world still remain largely underserved with financial services. These rural economies are characterized by low levels of cash liquidity, seasonality of incomes, highly segmented markets, and increased covariant risk. In providing services in these areas financial institutions face high transaction costs, low rates of internal capital mobilization due to poor physical infrastructure and a low density population making outreach expensive.

Interested in expanding financial services to remote-rural areas, the Ford Foundation Affinity Group for Development Finance commissioned the Coady International Institute and a global team of researchers to conduct a study on member-owned financial institutions (MOIs).

A key assumption for the study was that member-owned institutions offer distinct advantages for remote rural outreach. Beyond keeping operating costs down member-ownership and member participation are important factors. Member-owned institutions are typically located close to or within the communities they serve and are adapted to the local context and framed by local inputs. In the above context the aim of this study was to identify the potential of MOIs and their support structures to serve remote-rural populations, particularly the poor.

The study involved several facets and spanned three years. First, a literature review was conducted on MOIs that provided primarily credit and savings services in Africa, Asia and Latin America, particularly in markets “unserved” by other financial institutions. Based on the literature review and identified gaps, a framework for the study was organized with two levels of analysis.

At the first level, seven case studies were selected in Africa, Asia and Latin America. Cases were selected to illustrate different types of member-owned institutions that have demonstrated strong outreach in remote-rural populations. The analysis focused on the demand and interests of the most decentralized groups and members.

The second level of analysis focused on how remote outreach was influenced by the three key drivers of outreach: governance; networking and linkages; regulation and supervision. Finally, a synthesis report brought all of the key findings together in one document.

Case Studies

Primary Agricultural Credit Society linkage, India: The best rural remote Self-Help Groups can do?: Case study

Author: Rewa Misra

English:
Cover [ 2.42 MB ]     Case Study [ 378 KB ]

Bengali: Click to Open. [ 1.26 MB ] 
French: Click to Open. [ 407 KB ] 
Spanish: Click to Open. [ 389 KB ]

Mutuelle Communautaire de Croissance (MC2s), Cameroon: Decentralized community banks for remote outreach: Case study.

Author: D. K. Serge

English:
Cover [ 2.42 MB ]     Case Study [ 512 KB ]

French: Click to Open. [ 519 KB ]
Spanish: Click to Open. [ 478 KB ]

Muntigunung Lembaga Perkreditan Desa, Indonesia: Village ownership as a model for remote outreach of financial services: Case study.

Author: Rewa Misra

English:
Cover [ 2.42 MB ]     Case Study [ 296 KB ]

Bahasa: Click to Open. [ 255 KB ]
French: Click to Open. [ 308 KB ]
Spanish: Click to Open. [ 262 KB ]

Village Savings and Loans Associations in Niger: Mata masu dubara model of remote outreach: Case study.

Author: Alfred Hamadziripi

English:
Cover [ 2.42 MB ]     Case Study [ 382 KB ]

French: Click to Open. [ 388 KB ]
Spanish: Click to Open. [ 346 KB ]

Self- Help Group (SHG) and Mutually Aided Cooperative Societies (MACS): Does federating enable remote outreach? : Case study. 

Author: Rewa Misra

English:
Cover [ 2.42 MB ]     Case Study [ 350 KB ]

French: Click to Open. [ 360 KB ]
Spanish: Click to Open. [ 341 KB ]
Telugu: Click to Open. [ 127 KB ]

Mixtlan Rural Cooperative, Mexico: Does being federated help remote outreach?: Case study. 

Author: Patricia L. Rodriguez

English:
Cover [ 2.42 MB ]     Case Study [ 359 KB ]

French: Click to Open. [ 361 KB ]
Spanish: Click to Open. [ 313 KB ]

The Jardín Azuayo Savings and Loan Cooperative, Ecuador: A governance model for rural outreach: Case study.

Author: Red Financiera Rural

English:
Cover [ 2.42 MB ]     Case Study [ 427 KB ]

French: Click to Open. [ 420 KB ]
Spanish: Click to Open. [ 416 KB ]

Thematic Papers

Savings and spider plants: What is good governance for member-owned institutions in remote areas? : Thematic paper.
Author: Nanci Lee

English:
Cover [ 2.42 MB ]     Thematic paper [ 382 KB ]

French: Click to Open. [ 402 KB ]
Spanish: Click to Open. [ 360 KB ]

Linkages and networking of member-owned institutions in remote rural areas: Thematic paper.
Author: Malcolm Harper

English:
Cover [ 2.42 MB ]     Thematic paper [ 327 KB ]

French: Click to Open. [ 337 KB ]
spanish: Click to Open. [ 307 KB ]

Regulation and supervision of member-owned institutions in remote rural areas: Thematic paper. 
Author: Renée Chao-Béroff

English:
Cover [ 2.42 MB ]     Thematic paper [ 304 KB ]

French: Click to Open. [ 312 KB ]
Spanish: Click to Open. [ 274 KB ]

Synthesis Paper

Financial services in remote rural areas: Findings from seven member-owned institutions: Synthesis paper

Authors: Madeline Hirschland, with Renée Chao-Béroff, Malcolm Harper and Nanci Lee.

English:
Cover [ 2.42 MB ]     Synthesis paper [ 457 KB ]

French: Click to Open. [ 483 KB ]
Spanish: Click to Open. [ 483 KB ]

Literature Review

Member-owned institutions (MOIs) can achieve impressive outreach. They often serve more rural markets than any other type of financial institution. They typically recover their costs. Through growth or replication, they can serve large numbers of clients. And though often limited in scope, their services may respond to client demand and cost clients less than their alternatives. Frequently, MOIs are plagued by fraud and mismanagement. Their scale and continued existence is limited by their governance.

This study examines what outreach can be expected of different types of MOIs and key controllable factors that affect it. We want to understand how MOIs might be supported to provide ongoing affordable financial services to meet the demand of large numbers of low-income remote-rural members. Therefore, we consider three drivers of outreach:

  • Internal governance
  • Participation in federations or networks and linkages to private suppliers, NGOs and government
  • Regulation and supervision

Our analysis is based on a review of the literature on MOIs and focuses on MOIs that provide primarily credit and savings services in Africa, Asia and Latin America. We are particularly interested in MOIs that serve markets unserved by other financial institutions.

Financial Services in Remote Rural Areas: Findings from seven member-owned institutions: A literature review
Authors: Madeline Hirschland, with Renée Chao-Béroff, Malcolm Harper and Nanci Lee.
English:
Cover [ 2.42 MB ]     Literature Review [ 694 KB ]

This study involved several facets and spanned three years. A literature review was conducted on Member-Owned Financial Institutions (MOIs) that provided primarily credit and savings services in Africa, Asia and Latin America, particularly in markets “unserved” by other financial institutions. Based on the literature review and identified gaps, a framework for the study was organized with two levels of analysis.

Key Findings from the Literature Review

The review found that MOIs can achieve impressive outreach. They often serve more rural markets than any other type of financial institution and typically recover their costs. Through growth or replication, they can serve large numbers of clients. And, though often limited in scope, their services may respond to client demand and cost clients less than their alternatives.

Based on the literature review, three key drivers of outreach were identified for further analysis:

  • internal governance;
  • networking and linkages;
  • regulation and supervision

 

Summary Document and Guide

Financial services in remote rural areas: Findings from seven member-owned institutions: Summary Document and Guide

Authors: Madeline Hirschland, with Renée Chao-Béroff, Malcolm Harper and Nanci Lee.

English:
Summary Document and Guide [ 1 Mb]

Complete Study

Financial services in remote rural areas: Findings from seven member-owned institutions: Complete Study

Authors: Madeline Hirschland, with Renée Chao-Béroff, Malcolm Harper and Nanci Lee.

English:
Complete Study [ 4 Mb zip file]

Focus Notes

What is good governance for member-owned institutions in remote areas?
Author: Nanci Lee

Focus Note [ 200 KB ]

Linkages and networking of member-owned institutions in remote rural areas
Author: Malcolm Harper

Focus Note [ 180 KB ]

Regulation and supervision of member-owned institutions in remote rural areas
Author: Renée Chao-Béroff

Focus Note [ 180 KB ]