Fletcher in the News

Cash Cows: Why Bank Accounts That Work Like Livestock Help the Poor: CEME Senior Fellow Ignacio Mas Weighs In

In an age of mobile banking and digital transactions, many poor people still shun basic banking services and put their extra money in livestock. Why?

Cows make sense as a savings account, says Ignacio Mas, a senior fellow at the Fletcher School's Center for Emerging Market Enterprises at Tufts University.

People want to put money away in a place where they cannot immediately spend it. Like a certificate of deposit, a cow or other livestock fits this need. A cow also produces milk and fertilizer, which families can sell. It may give status to the owner, or be a religious symbol.

But a recent Yale University study found that poor Indians lost 9 percent to 64 percent of their livestock investment.

"The poor are often willing to earn negative interest to access reliable savings services," wrote Nathalie Tadena in The Wall Street Journal.

If using a savings account worked more like a cow, poor people might be more willing to put their money in a bank, says Mas. Banks and telecom companies must tailor accounts to suit the needs of poor clients, Mas says, adjusting programs so that poor clients can truly plan for a more secure future.

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