The Unbanked Poor and Gender
Globalization has emphasized the difference in lifestyles between the rich and the poor as well as demonstrated how poverty impacts families. The burden of poverty falls more heavily on women than on men. An article in the April 30, 2012 online issue of the International Herald Tribune (IHT) “ The World’s Unbanked Poor” is an example of the intersection of social class and gender. Status is the characteristic by which people categorize where a person fits in the world. The poor of the world are assigned a low status for reasons based on the point of view of the observer in society. Since women are the majority of the poor in the world they fall into the same category based on gender. When an observer assigns ‘ low-status’ to a person or group it is difficult for the person to escape the prejudice and discrimination that the label brings. Social class and gender are often evaluated with conflict perspective theory. That seems to be a natural analysis because of the conflict between the poor and the rich in most countries of the world.
The article chosen from IHT gives a report on the poor across the world compared to the rich in terms of banking habits. Globally when low-income, developing countries are compared to rich countries far fewer citizens of developing countries have a savings account in any kind of a financial institution. Statistics from the United States are included in the report. The results are from a World Bank report and interestingly
The United States stands out for the proportion of its poorest residents who do not have an account at a formal institution. More than a quarter of those in the poorest quintile in the United States do not have an account, compared with just 3 percent of that quintile in Australia and Britain, and 9 percent in Canada. (IHT, 2012, para. 8)
The news article is very straight forward. It does not seem to contain bias towards any group, community or country. The results from a wide spectrum of countries are reported. These countries represent the developing and the developed countries of the world. It might be considered a bias that the article assumes that savings accounts kept in a banking institution are better than not having that type of savings account. That is arguable though because the economist from the study group offered straight forward real reasons why that is the case.
Conflict perspective theory considers social issues from the amount of tension between groups like between the rich and the poor, men and women, or Americans and immigrants. It is often discussed with economics as an example because the tensions between different groups are often due to economic inequality. Also conflict theory arose from the theories of the economists Marx and Engles.
The United States is often evaluated in terms of ‘ macro-sociological structural functionalism’ which looks takes a view of the ‘ whole picture’ of a society as opposed to a single group within the larger society. A structural functionalist looks at what ingredients a society needs to be stable. They suggest that stability is more easily sustained when all the members of the society share the same values.
The lead economist for World Bank finance and public sector development research group, Klapper, takes a ‘ micro-sociological’ point-of-view. She has evaluated the problem of the poor not having savings accounts by the impact it has based on gender, “. . . Among those who do not have bank accounts in the United States, more than two-thirds are women while a quarter are immigrants. And 46 percent cited lack of trust for the reason.” (IHT, 2012, para. 10). Klapper reports the large amount of potential bank account holders who do not trust banks and financial institutions. Trust of financial institutions is a value which they do not share with others who have savings accounts in institutions. A structural functionalist would note that there is a probability of that because the society is not sharing the same value that is cause for instability in the society. A conflict perspective theorist might agree to some extent. But their main interpretation would be that the inequality between the rich and the poor, between men and women, or between whites and foreigners are the most likely underlying causes for the problem.
The figure of 46 percent indicates a high amount of exclusion for the two populations of women and immigrants who do not have saving accounts. A conflict perspective theorist would not agree with those that say that, ‘ It is their choice so they are the cause.’ They would be more likely to explain the problem from the perspective of exclusion. One
argument might be that the banks and other financial institutions have stereotyped the poor. Because a person is poor the institutions do not make an effort to include them in their advertisement campaigns and they do not make an effort in other ways to gain the business of poor people.
Addams (2009) explains some of the history of conflict theory in the United States in terms of the economic theories of Karl Marx versus that of an ‘ individualist.’ She explains that a ‘ scientific socialist’ interprets the tendency for capital to move away from the poor therefore concentrating more wealth in the hands of the rich as an issue of power. In other words the rich have the power the poor do not. An individualist on the other hand would argue that every time “ incentives to weaken the incentive to individual exertion” is bad (Addams, 2009, 9). The individualist does not see the problem as a conflict between two groups, one rich and one poor, but as a problem of not working hard enough. In the case of the people in the article who do not use banks, presumably because they do not have enough money for a savings account the individualist would want to explain to the poor people that once they work hard enough to make some money ahead of their monthly bills they should start a bank savings account. This is clearly in conflict with the person who identifies inequality as the problem and sharing of wealth as the solution.
The survey for the study reported on by IHT was conducted by the Gallup Organization who surveyed “ 150, 000 adults in 148 economies” (IHT, 2012, para. 4). From the results of the survey Gallup estimated that “ there are 2. 5 billion adults around the world who do not have a formal account, and that about 65 percent of them said they did not have enough money to use one” (IHT, 2012, para. 4). Klapper spoke about the situation in terms
of exclusion and inclusion “ Financial inclusion enables poor people to save and to responsibly borrow – allowing them to build their assets, to invest in education and entrepreneurial ventures – and to improve their livelihoods” (IHT, 2012, para. 5). The advantages Klapper lists are the advantages the people with money have over the poor. In contemporary times many people use activism to resolve conflict between classes due to inequality. For example the Occupy Wall Street is an example of a movement across that United States and in other countries that addressing the issue using peaceful protest.
The World’s Unbanked Poor
After the global financial crisis, banks may not be viewed as the most trustworthy organizations, but generally they are considered a safer place to keep money than stowing it under a mattress.
A new World Bank report shows that the proportion of adults who have an account at a bank, credit union or other formal financial institution in high-income countries is more than double what it is in developing countries — and suggests that the very lack of such an account may perpetuate poverty.
“ Giving people a safe, affordable place to save their money is important,” saidLeora Klapper, lead economist in the finance and private sector development research group at the World Bank and an author of the report.
The study, based on a survey of 150, 000 adults in 148 economies conducted by the Gallup Organization, estimates that there are 2. 5 billion adults around the world who do not have a formal account, and that about 65 percent of them said they did not have enough money to use one.
“ Formal accounts and savings may help poor people smooth their consumption and weather unexpected events such as unemployment, accidents, illnesses and deaths without necessarily resorting to expensive debt,” Ms. Klapper wrote in an e-mail. “ Financial inclusion enables poor people to save and to responsibly borrow — allowing them to build their assets, to invest in education and entrepreneurial ventures — and to improve their livelihoods.”
There are some countries — including Cambodia, the Democratic Republic of Congo, Guinea, the Kyrgyz Republic, Turkmenistan and Yemen — where fewer than 5 percent of adults have a formal financial account.
Banking habits differed by region. Among people who are living on less than $2 a day, 27 percent of those in South Asia and East Asia have some kind of formal account. In the Middle East and North Africa, only 6 percent of those surviving on less than $2 a day do.
There is also a gender gap. In developing economies, men are much more likely to hold a formal account than women: 46 percent of men in these countries report having an account, while only 37 percent of women do.
The United States stands out for the proportion of its poorest residents who do not have an account at a formal financial institution. More than a quarter of those in the poorest quintile in the United States do not have an account, compared with just 3 percent of that quintile in Australia and Britain, and 9 percent in Canada.
Ms. Klapper said that among those who do not have bank accounts in the United States, more than two-thirds are women while a quarter are immigrants. And 46 percent cited lack of trust as a reason.
Although having a formal account typically helps people save more safely, even those who don’t have formal accounts put aside money for future use.
According to the report, 36 percent of those polled had saved or set aside some money in the previous 12 months. Not all of that money was going to bank accounts, of course. In wealthier countries, people also use various investment products and in developing countries, residents used community-based savings clubs.
Rich, Mokoto. (2012). The World’s Unbanked Poor. Economix. The New York Times. Retrieved 29 April 2012 from http://economix. blogs. nytimes. com/2012/04/30/the-worlds-unbanked-poor/
Addams, Jane. (2005). ‘ The Settlement in the Labor Movement.’ In Diverse Histories of American Sociology. Anthony J. Blasi (ed.) Boston, MA: Brill, 2005. pp. 3-18.
Economix: Explaining the Science of Everyday Life April 30, 2012, 9: 00 AM