> Posted by Center Staff

This morning, Accion released a report, “The Financial Behavior of Rural Residents: Findings from Five Latin American Countries.” The report, by Jacqueline Urquizo, provides the financial industry with new information relevant for improving financial services to rural residents in Latin America.

The study is based on market research conducted in Colombia, Dominican Republic, Ecuador, Nicaragua and Peru and provides a detailed portrait of access, use and attitudes towards financial services by rural residents, both farmers and microentrepreneurs.

Rural residents are some of the poorest and hardest-to-reach populations in the world. The study offers a unique opportunity to understand the financial choices rural residents make and the attitudes they bring when they interact with banks and microfinance institutions.

We at CFI think these are some of the more interesting findings:

  • Working capital credit and savings are the best known and most used formal financial services. However, while 80 percent of respondents say they know about these products, only 40 percent use them.
  • Relatively few people save in financial form. Surpluses are used primarily for investment. Many respondents consider that storing idle or “nonworking” funds as financial savings is a poor use of their money.
  • One in two consumers saves in monetary form, and among those who save, there is diversity in the purpose and use of savings. Some maintain a “static” savings amount as a reserve fund (e.g., for health emergencies), while others seek to grow their savings over time.
  • The most significant barriers to formal savings are lack of convenience in operating savings accounts, bank fees and the perception that amounts are too small to deposit.
  • Although rural residents were not well aware of the potential value of insurance, 70 percent had experienced a shock event in the past three years.
  • Rural residents often get information through nontraditional media, such as local radio, speakers in the main square, mobile ads in moto-taxis, leaflets and public loudspeakers. Key community individuals, such as shop owners, and social, economic and religious gatherings (fairs and parish meetings), are sources of information exchange.

“The portrait of rural residents that emerges from this study is exactly the kind of detailed client information the industry is hungry for,” said Elisabeth Rhyne, managing director of CFI. As we learned from CFI’s “Opportunities and Obstacles” survey last year, participants in the financial inclusion sector think it is critical for providers to develop a deeper understanding of clients. The results from this study will prove a valuable tool in designing and marketing financial products that meet the specific needs of rural residents. We believe they also hold insights that are relevant to other rural clients worldwide.

The research in this report was supported by the Inter-American Development Bank and based on survey interviews with people living in rural areas within reach of selected microfinance institution branches. It targeted heads of households who work in an independent activity: entrepreneurs and small farmers. The study describes the rural population according to socioeconomic and psychographic variables, social interactions and financial behavior, considering credit, savings, investment and risk management. It also discusses financial education and awareness and use of formal financial services.

To see the report, “The Financial Behavior of Rural Residents,” please click here.

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