In all economies, financial systems perform a basic set of functions, which include the need to pool resources, to save and borrow, to make payments, and to collect information. And yet, in rich and poor communities, the ways in which those needs are met differ greatly. In part, this is because traditional financial service firms have found it too expensive to serve poor neighborhoods. But it is possible to work with less traditional institutions to meet those needs. By partnering with strong social organizations such as churches, financial institutions can benefit both themselves and investors.
Churches can help close such information gaps by vouching for parishioners' reliability.
There are certainly problems that come with mixing business and religion, as the authors concede. Ethical issues, trust issues, and issues of experience all come to mind. But understanding that functions need to dictate the structure of the financial service sector may be the first step toward achieving inner-city prosperity. All rights reserved .