| dc.description.abstract | Rural savings are determined by both "ability" and "incentives"
to save. All except two studies reviewed emphasize "ability,"
though some qualitatively analyse "incentives." This relative
neglect is justified when the positive substitution effect of the
"incentives" is off-set by its negative income effect. Such "total"
effect does not necessarily arise. "Incentives" variable can be
incorporated in both cross-sectional and time-series models, as
shown in the two exceptions. Past time-series estimates of rural
savings are characterized by reporting, measurement, and analytical
weaknesses. Some of these lead to underestimation of these
savings. This, however, does not mean that all of the additional
savings are mobilizable by the financial institutions. This is
because rural households hold their savings in monetized as well
as non-monetized forms. Moreover, some of the monetized
savings are held in the form of physical assets. Thus, only those
monetized savings which are invested in financial assets of the
informal rural financial market (RFM) can be considered as potentially
mobilizable by the financial agencies. Institutionalization of
such savings would improve their efficiency by promoting better
allocation among different areas, sectors, economic activities, and
also to entrepreneurs. To identify appropriate policies, further
literature may be developed by promoting and researching programmes
with better rates of return on financial savings, besides
those with opportunities to transact other businesses. | |
