Meet People Where They are: Building Formal Credit Using Informal Financial Traditions

22 Pages Posted: 29 Apr 2020

See all articles by Thomas Akana

Thomas Akana

Federal Reserve Banks - Federal Reserve Bank of Philadelphia

Multiple version iconThere are 2 versions of this paper

Date Written: February, 2020

Abstract

The Consumer Finance Institute hosted a workshop in February 2019 featuring José Quiñonez, chief executive officer, and Elena Fairley, programs director, of Mission Asset Fund (MAF) to discuss MAF’s approach to helping its clients improve access to mainstream financial markets. MAF’s signature program, Lending Circles, adapts a traditional community-based financial tool known as a rotating savings and credit association (ROSCA) to help establish or expand credit reports for participants who may not be able to do so through traditional means. Lending Circles have served more than 10,000 clients since 2007 and have expanded well beyond MAF’s core constituency in the Mission District of San Francisco. Quiñonez and Fairley discussed MAF’s approach to working with the communities it serves and shared the key successes and challenges that MAF has encountered. This paper provides an overview of the information shared in the workshop and additional research connecting Lending Circles to previous work on ROSCAs.

Keywords: rotating savings and credit association (ROSCA), underserved, credit invisibles, fintech, financial technology, financial inclusion, unbanked

JEL Classification: D14, D71, D91

Suggested Citation

Akana, Thomas, Meet People Where They are: Building Formal Credit Using Informal Financial Traditions (February, 2020). FRB of Philadelphia Payment Cards Center Discussion Paper No. 20-01, Available at SSRN: https://ssrn.com/abstract=3587384 or http://dx.doi.org/10.21799/frbp.dp.2020.01

Thomas Akana (Contact Author)

Federal Reserve Banks - Federal Reserve Bank of Philadelphia ( email )

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