Affordable Financial Services and Credit for the Poor

Abstract

The financial services and sources of credit available to poor families affect the rate at which families can be financially empowered through building assets. This paper provides background information on financial services, including credit sources, which are available for low-income people and communities. Also discussed are policies affecting financial markets and promising innovations in delivering affordable financial services to low-income families. Implications for social work education, practice and advocacy are discussed.     

Developing Financial Management Training in Low-Income Communities

Abstract

As welfare policy contractions and declines in real wages have placed severe financial pressures on low-income families, programs to improve financial management practices and to help the poor accumulate assets have grown. This article examines the need for such programs and the implications associated with implementing two prominent training strategies-one that focuses solely on financial management training and another that combines such training with savings incentives.

Based on data from a large financial management training program, we find that knowledge deficits about basic financial issues are substantial, and that the type of financial training program offered has important implications with respect to the subgroups of low-income people likely to be served within a community. We discuss program issues critical to the implementation of such programs in low-income communities, with a focus upon more carefully attending to their participant empowerment and community development potential.     

Policies to promote economic stability,asset building,and child development

This paper makes the case that the pattern low-income families walk into is a present time-oriented or consumption-based welfare system, with attendant incentives and disincentives; in contrast, the pattern higher-income families walk into is future-oriented or asset-based. These two divergent systems do not deliver equitable educational outcomes for children. To ensure that higher education can play an equalizing role in the U.S. economy, the nation needs a better welfare system for the poor, one that builds on the asset-accumulation structures that serve the needs of advantaged families. This new institutional approach would undo the current system of educational advantages for higher-income children over low-income children and, in turn, redress educational inequalities in America. In order to create a level playing field welfare policies are needed that enable low-income families to accumulate assets. In this paper we discuss policies that might help low-income families accumulate assets, including modifications to existing income supports, as well as the development of complementary asset-based institutions.     

Low-Income Homeownership Policy as a Community Development Strategy

Summary

Homeownership for the poor increasingly is on the political agenda in the United States. This is due largely to the assumptions made by policy makers and citizens about the benefits of homeownership. Despite this emphasis in recent administrations, little theoretical literature has been developed that specifies the impact of homeownership on community development. This essay reviews relevant theoretical and empirical literature and suggests that homeownership affects communities through the promotion of increased wealth accumulation, improved property upkeep, decreased residential mobility, and increased community participation. This article addresses the special needs of poor communities and households, and the implications for low-income housing policy. Overall it is suggested that community economic development and low-income homeownership be pursued in tandem.     

Educational Status and Savings Performance in Individual Development Accounts

Abstract

This study examines the relationship between education and savings performance in Individual Development Accounts (IDAs), a matched savings program for the poor. Based on economic and institutional theories of savings, we further investigate whether the relationship between education and savings is mediated by income, intended uses of IDAs, or program factors. The data of this study are from the American Dream Demonstration (N = 2,150), the first national demonstration of IDAs. The results indicate that education was positively related to savings after controlling for program factors and other individual characteristics. Household income and two program factors, monthly savings target and financial education, partially mediated the relationship between education and savings outcomes. These results provide some support for both economic and institutional theories of savings among low-income people. The findings also may help design and implement more effective savings programs for the low-income population and its varying segments.     

Addressing economic vulnerability among low-income families in America: is the basic income approach a viable policy option?

ABSTRACT

Income instability characterizes the lives of many low-income families in America. Growing income inequality, wage stagnation, unstable jobs, and limited savings are only a few of the factors contributing to the chronic economic insecurity that many low-income families experience today. There has been a renewed interest in recent years in the idea of a basic income as a policy solution to address the problem of income instability. This brief provides an overview of the concept of basic income and discusses its strengths and limitations in promoting financial stability among vulnerable families in both the short- and long-term.     

Household Assets and Food Security: Evidence from the Survey of Program Dynamics

This study uses the Survey of Program Dynamics data to examine the independent role of household assets in food security. It further examines whether assets provide a buffer for low-income households to food insecurity in the face of income losses. Results of the Two-Part Model analyses show that household assets have a significant association with food security in both the full sample and the low-income sample. In the presence of household assets, income’s effect on food security decreases. In addition, the significant interaction terms of income loss and household assets indicate that assets provide resources to smooth food consumption. The findings of this study suggest a consideration of asset building strategies in asset related provisions of current food assistance policy.     

Piketty's Calibration Economics: Inequality and the Dissolution of Solutions?

Abstract

By popularising interest in inequality, Thomas Piketty's Capital in the Twenty-First Century has made a significant contribution. It has helped to change the basic terms of debate regarding wealth and income. However, Capital exhibits several weaknesses. The overall statement of Piketty's 3 laws tends to confuse the reader by conflating capital with all forms of wealth, and capital with the current market valuation of wealth assets. The whole creates a form of empiricism by metrics or calibration. The aggregation also lends itself to data as history rather than as historically grounded explanation of evidence. Concomitantly, it lacks a theorisation of capitalism, of power, of the state, of social movements, and of social transformations. This affects the way in which possible solutions to inequality are conceived. However, it does provoke further grounds for ethical counterargument productive of more progressive solutions to the problems it highlights.     

Enhancing the Resilience of African American Families

Abstract

This article attempts to demonstrate how a resiliency perspective can assist helping professionals in working more effectively with low-income families of color. It also seeks to assist social workers and policymakers in developing program interventions and public policies that enhance resilience by building on the strengths and assets of families of color.     

The Grameen Bank in Bangladesh: Helping Poor Women with Credit for Self-Employment

Summary

Social work with poor women should include options for self-employment as avenues out of poverty. The Grameen Bank of Bangladesh exemplifies one micro-lending strategy to overcome traditional barriers and assist very poor women to earn an income and participate in the local economy. Credit lending principles combined with social development goals are highlighted, and the impact of this model discussed in terms of its success in alleviating poverty. Transferability of the model to the United States is discussed, and implications for social work offered.     

Explaining microfinance's resilience: the case of microfinance in Australia

ABSTRACT

Microfinance has been unsuccessfully deployed as a poverty reduction strategy in the Global South. However, despite advocates acknowledging this shortcoming, the sector continues to grow. Moreover, over the past decade it has expanded its geographic scope, targeting poor communities in the Global North under the banner of financial inclusion. This article investigates the growth of the Australian sector. Analyzing the impacts of reforms to Australia's social security system alongside the political economy of the microfinance industry, it argues the debtfare state in Australia has provided fertile ground for microfinance's expansion. Documenting the advocacy strategies and tools to target vulnerable communities used by microfinance organizations and corporate partners, it charts how government support and subsidies have created a favourable regulatory environment, driving the sector's growth. This has benefitted these coalitions while displacing other forms of social security, despite the lack of robust evidence demonstrating microfinance's benefits for the poor.     

Attached or Entrenched? Community Attachment and Place Construction in Southwest Houston,an American Banlieue

Community attachment and the cultural contexts of poor urban neighborhoods are both subjects of long traditions of scholarship. Few studies, however, have extended these traditions into increasingly marginalized areas located beyond historically poor ghetto or barrio communities. This article is addressed to the sentiments of attachment and constructions of place among low-income young men in suburban-styled, post–World War II communities on the outer fringes of Houston. Drawing from ethnographic fieldwork, I show that although the young men are widely appreciative of the area’s diversity and uniqueness relative to other low-income communities, their brief and superficial exposures to heterogeneity impel them to construct place and express attachments around a complex set of geographic, class, and ethnoracial distinctions. Sensing that such negotiations of the socio-spatial environment might be perceived as fickle, ill informed, and destructive, I discuss implications in relation to cultural heterogeneity and broader concerns about evolving metropolitan poverty contexts.     

ASSET DYNAMICS,LIQUIDITY, AND INEQUALITY IN DECENTRALIZED MARKETS

The Kiyotaki and Wright model has exerted a considerable influence on the monetary search literature. We argue that the model also delivers important insights into a broader range of macroeconomic and development issues. The analysis studies how market frictions and the liquidity of assets affect the distribution of income. Experiments illustrate how the economy adjusts to shocks to asset returns and to the matching technology. They also deal with long‐run transition. An experiment interprets the reversal of fortune hypothesis as a situation in which an economy with a low‐return asset takes over a similar economy with a high‐return asset. (JEL C61, C63, E41, E27, D63)     

Feminized cultural capital at work in the moral economy: Home credit and working-class women

One of the defining features of the home credit sector is the role played by its agents—workers who act as intermediaries between lending companies and borrowers to facilitate lending and collect repayments. There is a prevailing and pervasive narrative in the sector that women make superior agents, largely based on the belief that female agents can manage relationships with borrowers more successfully than their male counterparts. This article analyzes data from 349,078 home credit accounts (loans), as well as 71 interviews with home credit agents and lending company managers, to evaluate both the myths and realities of women's roles in home credit. The data is also used to explore the opportunities for—and potential constraints on—women's career progression in home credit work, based on an understanding of the moral economy in which they operate. By exploring the moral economy of low-income communities, the article highlights the role of working-class women's cultural capital within the labor market. Despite women forming the majority of the agent workforce in home credit, women's capital is undervalued in comparison with their male counterparts' capital. The analysis within this article allows a greater understanding of the highly classed and gendered nature of the moral economy of low-income communities and the exchange value of women's capital within the labor market.     

Ethical and Racial Conflicts in Urban-Based Action Research

Abstract

Through the use of a case study of a joint faculty-student research project, this paper discusses how community-based action research, policy analysis, and community organizing can be synthesized in work with low-income communities. It outlines potential implications of this synthesis for both community practice and social work education.     

Globalisation and the Rural Poor

This article surveys how globalisation is affecting rural poverty. The forces of change may affect the welfare of the rural poor through their influence on productivity, growth, income distribution, technologies, the security of livelihoods, and policies. There are both credit and debit entries: large potential benefits, for example from accelerated growth, but also real dangers that the rural poor will be left behind, for example that they will not have access to the knowledge and other assets necessary for success in a commercialised world. The article also discusses some of the influences on the ways the forces of change work themselves out, stressing the importance of market access, positive government policy stances and the assets of the rural poor.     

Compulsory Income Management: A Critical Examination of the Emergence of Conditional Welfare in Australia

Abstract

The introduction of compulsory income management by the then Coalition Government in 2007 signalled the increasing policy influence of individualistic as opposed to structural explanations of social disadvantage. Using key policy and evaluation literature, this article critically examines the principal arguments for and against compulsory income management. Specific questions are raised about the top-down and coercive nature of compulsory income management, the lack of supporting empirical evidence, and its apparent discrimination against Australians who are Indigenous or reliant on income security payments, or both. Some conclusions are drawn about the potential for more effective policy solutions that would involve a genuine partnership with disadvantaged communities.     

Negotiating the New Market: Women,Families, Women’s Organizations and the Economic Transition in Poland

Women have been affected more negatively than men by the economic transformation in Poland. They are the majority of the unemployed and the poor, they have a more difficult time finding jobs, and their incomes are significantly lower than mens. The disadvantageous position of women on the labor market, coupled with increasing governmental withdrawal from social provisioning like childcare, health care, and education, has created problems for families, especially for growing numbers of single mothers and two-parent low-income families. The transition to a market economy also has generated a steady growth of womens organizations which have stepped in where the state has withdrawn from social provisioning and provide assistance to women and their families. These organizations are not only helping women and low-income families adjust to the new market situation, but also to negotiate the market so that it better responds to their needs.     

Resource Accessibility and Walkability Among Older Adults in Extended-Stay Hotels

Older adults represent a large and growing population group in the United States. This population cohort is projected to grow to 72.1 million, or 19% of the total population, by 2030, up from 40 million in 2010 (Administration on Aging, 2011; Federal Interagency Forum on Aging-Related Statistics, 2012). Despite reported decreases in the proportion of older adults living in poverty in recent years, inequities prevail. Approximately 40% of older American households reported housing cost burdens¹Cost burdens are expenditures on housing and utilities that exceed 30% of household income. (Federal Interagency Forum on Aging-Related Statistics, 2012). Many of these low-income older adults live in socially and economically marginalized positions, and housing them remains a major challenge complicated by (a) limited affordable housing options and (b) chronic health conditions that seriously undermine long-term health and mobility. In a study on the impacts of public housing transformation in Atlanta, Oakley, Reid, & Ruel (2011) reported that 26% of seniors entered public housing because of a health condition or disability. According to Smith (2006), seniors in public housing are in worse health than other older Americans, even other poor older Americans suffering from such chronic health conditions as hypertension, diabetes, arthritis, and asthma. Despite these realities, Ball (2012) has noted that older adults receive little attention in comprehensive development planning beyond specialized age-segregated retirement and care communities. Salkin (2009) echoes similar concerns about the tendency toward housing initiatives and designs for more affluent older adults. She commented that most states have focused attention on programs that are best suited for seniors who do not have the same income limitations as those who are truly on fixed incomes and living close to the poverty level (Salkin, 2009). While public housing remains the predominant affordable housing option for low-income older adults, such housing is out of reach for many low-income older adults who find themselves displaced and homeless. As a result, some of these adults move into extended-stay hotels to remain sheltered.     

The future in anti-poverty strategies

The uneven distribution of income and assets in the United States continues to have negative effects on the personal, social, and economic well-being of adults and children. Poverty affects the entire family and is often associated with household instability, school dropouts, teen pregnancies, and intergenerational poverty. Although income-based anti-poverty policy initiatives have helped individuals with children meet their basic consumptive needs, they have done little to help families lay a foundation for their futures. The implementation of asset-building programs that provide Individual Development Accounts (IDAs) to both adults and children reflects an approach to reducing the incidence and impact of poverty in the United States. Current state and federal policy initiatives that are designed to help economically vulnerable individuals build assets are also described in this paper. Implications of asset-building program and policy initiatives on the well-being of low-income children and adults, households, and communities are discussed to demonstrate the impact that resources and opportunities have on the social and economic growth of the entire family.