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Submitted by Nachiket Mor on
This is an excellent case study and I am glad that the author presents it as a composite life cycle story. There is clearly the message, as the author points out, that there is much to be gained if countries run robust financial systems. However, to me there is another message embedded in the story as well -- that financial products in which the individual takes a risk on the financial system need to be held by well diversified and well capitalised national institutions while those in which the reverse is true (such as credit) can be dealt with by local financial institutions. A number of financial systems and financial strategies (including those supported by the World Bank) seem to be doing the opposite -- allowing savings and insurance to be managed by community institutions (such as self-help groups and village savings associations) while they are turning to national institutions for credit.