Models of Including Financially Inactive Population into the Financial System

Matić, Branko and Serdarušić, Hrvoje (2008): Models of Including Financially Inactive Population into the Financial System. Published in: Interdisciplinary Management Research IV (2008): pp. 296-310.

Abstract

Raising money and directing it into savings is the most important passive task in banking. Restrictive monetary policy makes it increasingly difficult for banking institutions to take loans, thus they turn to the general population as a money source. Their interest is partly served through inclusion of financially inactive population. As the new legislation will correct the current illogical situation (some deposit institutions have not been under control of the central bank), this will eliminate the unfair competition which is at the moment existing in the banking system. At the same time, the operation of a new form of non-profit deposit institutions, i.e. credit unions, will be regulated. With solidarity and common interest as the basic tenets of their operation they can be attractive to this particular segment of population. The paper explores and proposes some possible models and ways of including the financially inferior population into the financial system.

• Item Type: MPRA Paper
• Language: English
• Keywords: financial system, financially inactive population, money source, solidarity, common interest, credit union
• Subjects: E - Macroeconomics and Monetary Economics > E2 - Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy; E - Macroeconomics and Monetary Economics > E5 - Monetary Policy, Central Banking, and the Supply of Money and Credit; G - Financial Economics > G2 - Financial Institutions and Services > G24 - Investment Banking ; Venture Capital ; Brokerage ; Ratings and Ratings Agencies; E - Macroeconomics and Monetary Economics > E4 - Money and Interest Rates; G - Financial Economics > G2 - Financial Institutions and Services > G21 - Banks ; Depository Institutions ; Micro Finance Institutions ; Mortgages

References

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