The interaction between poor people and formal sector institution are limited
Savings, credit and insurancecannot be used as ‘separate’ services because the poor use saving and credit as substitutes for insurance
In a research, Wright and Mutesasira (2001) http://www.microfinancegateway.org/gm/document-1.9.28889/26216_file_the_relative_risks_.pdf state that savings services have a main role in business management and household affairs. There are many poor people will be helped if microfinance institutions take risk and provide useful savings and credit services. They also give an example about Elgon Village Bank to support this issue. This bank provided useful services for over 1,700 clients that had $312,875 total in deposit and 313,750 in withdrawn. Most of the customers were using their accounts for managing their market business and had small amount of money in the accounts (£5 on average per account). The institutions had to take risks with the deposit but these services helped the poor to manage their properties in a better way.
In the other hand, microfinance system also helps fight against the poverty, especially in the developing countries. The World Bank estimates that there are more than one third of the population around the world lives with less than $2 per day. With this low level of income, there are no conventional bank will allow