What I have learned today [2015/4/11]

 
1. According to Nicholas Megalis, one of the most popular vine artists, vines take a lot of effort to make and many do not even see the light of day....I thought that vines where just simply made and posted but it turns out that it requires tremendous effort and creativity. Say good bye to living off simply shooting short videos and expecting to live off vine.

2. Small cap premium may not be so strong. Damodaran discusses how the small capital premium is not as big or robust as it seems. Yet investors and analysts are slow to abandon the idea due to mmm....inertia and bias. Well, more trading opportunities for me :D


3. According to a human resource survey, Tuesday is the most productive day. Monday, you have the Monday effect and likely to have bunch of meetings. Tuesdays, you can really do work. Wednesday, you can still do work. Thursday and Friday? Well, weekend is just around the corner so...

4. An email is a binding contract. I guess it is written and get verified so...better be more careful with email.

5. According to a survey by UBS, wealthy clients thinks that an individual has to have at least $5 million and $1 million in cash to be "wealthy." I think five million is enough for you to lead a comfortable life even if some disastrous event happens. Assuming a conservative 3% return on your wealth, you make $150,000 which is enough for a decent life. Also, one million cold cash can be either used for emergency or to make killing when there is blood on the streets (e.g. financial crisis).


*From Snapshot Serengeti

Financial Services for the Poor

A recent study about banking for the poor finds that the villagers do not use formal banking services despite its accessibility due to concerns about embezzlement, poor service, and prohibitive withdrawal fees.

The study's results are not surprising but how could we further increase the usage of financial services by the poor. Here are three suggestions.

First, we need to establish financial trust and good governance. If you have lived in a developing country, then you know how much corruption exists. You can just google and you will see lots of fraud articles in developing nations.

Establishing financial trust and good governance takes time and lot of effort. One way to increase financial trust is to guarantee the deposits. If the villagers cannot trust the local bank or officials, an international organization may try to guarantee the deposits. Basically, the organization has to build trust in the community by being there and assuring that they will guarantee their deposits. This is costly but it is a start.

A more innovative way may include making soap operas having banking play an important role in the story. For instance, the marriage of the main characters was only possible due to savings. Soap operas are popular in Africa and have been used for combating diseases and enhancing hygiene

In terms of poor service, this will just take time and the most likely reason that the service is poor is because banking for the poor is not really profitable....

For withdrawal fees, one solution may be to have a pooled account for the whole village and as long as the village as a whole maintains a certain balance then the withdrawal fee would be waived. Although this could have some coordination costs, I believe that given the communal nature of village, it is doable.

One way to build trust and incentivize savings is offering matched savings. Donors would match the villager's savings as long as he keeps a certain amount of money in the bank for a certain amount of time. The matching would help build trust and encourage usages of financial services.

Another way would be offer savings lottery, studies show that they work quite effectively.

I believe that there is no silver bullet to solving poverty but we will push ahead and rigorous research will definitely help us get there ^^

Please support Innovation Poverty Action, which diligently conducts research to help alleviate poverty :D