IDEAS home Printed from https://ideas.repec.org/a/sae/anname/v689y2020i1p46-64.html

Walking a Tightrope: Using Financial Diaries to Investigate Day-to-Day Financial Decisions and the Social Safety Net of the Financially Excluded

Author

Listed:
  • Olga Biosca
  • Neil McHugh
  • Fatma Ibrahim
  • Rachel Baker
  • Tim Laxton
  • Cam Donaldson

Abstract

Financially vulnerable, low-income individuals are more likely to experience financial exclusion as they are unable to access financial services that meet their needs. How do they cope with economic instability, and what is the role of social networks in their coping strategies? Using financial diaries, we explore the day-to-day monetary transactions (n = 16,889) of forty-five low-to-moderate income individuals with restricted access to mainstream lending in Glasgow, UK, over a six-month period. Our sample includes users of microcredit and financial advice, as well as nonusers of these services. Findings reveal that informal lending to avoid the pernicious effects of short-term illiquidity was pervasive among these individuals. However, taking informal loans often strains valuable social capital and keeps people from building up a formal credit footprint. Our findings suggest that financially vulnerable populations would benefit from policies that focus on alternative financial mechanisms to help stabilize income-insecure individuals in the short-term.

Suggested Citation

  • Olga Biosca & Neil McHugh & Fatma Ibrahim & Rachel Baker & Tim Laxton & Cam Donaldson, 2020. "Walking a Tightrope: Using Financial Diaries to Investigate Day-to-Day Financial Decisions and the Social Safety Net of the Financially Excluded," The ANNALS of the American Academy of Political and Social Science, , vol. 689(1), pages 46-64, May.
    • Handle: RePEc:sae:anname:v:689:y:2020:i:1:p:46-64
    DOI: 10.1177/0002716220921154
    as

    Download full text from publisher

    File URL: https://journals.sagepub.com/doi/10.1177/0002716220921154
    Download Restriction: no
    File URL: https://libkey.io/10.1177/0002716220921154?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. repec:bla:pmomgt:v:27:y:2007:i:1:p:37-44 is not listed on IDEAS
    2. Benjamin Feigenberg & Erica Field & Rohini Pande, 2013. "The Economic Returns to Social Interaction: Experimental Evidence from Microfinance," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 80(4), pages 1459-1483.
    3. Donal G. McKillop & Anne-Marie Ward & John O. S. Wilson, 2007. "The Development of Credit Unions and Their Role in Tackling Financial Exclusion," Public Money & Management, Taylor & Francis Journals, vol. 27(1), pages 37-44, February.
    4. Thorsten Beck & Asli Demirgüç-Kunt, 2008. "Access to Finance: An Unfinished Agenda," The World Bank Economic Review, World Bank, vol. 22(3), pages 383-396, November.
    5. Townsend, Robert M, 1994. "Risk and Insurance in Village India," Econometrica, Econometric Society, vol. 62(3), pages 539-591, May.
    6. F. Pericoli & E. Pierucci & L. Ventura, 2015. "The impact of social capital on consumption insurance and income volatility in the UK: evidence from the British Household Panel Survey," Review of Economics of the Household, Springer, vol. 13(2), pages 269-295, June.
    7. Mercedes González De La Rocha, 2006. "Vanishing Assets: Cumulative Disadvantage among the Urban Poor," The ANNALS of the American Academy of Political and Social Science, , vol. 606(1), pages 68-94, July.
    8. Sabrina Bunyan & Alan Collins & Gianpiero Torrisi, 2016. "Analysing Household and Intra-urban Variants in the Consumption of Financial Services: Uncovering “Exclusion” in an English City," Journal of Consumer Policy, Springer, vol. 39(2), pages 199-221, June.
    9. Honohan, Patrick, 2008. "Cross-country variation in household access to financial services," Journal of Banking & Finance, Elsevier, vol. 32(11), pages 2493-2500, November.
    10. Gerald Friedman, 2014. "Workers without employers: shadow corporations and the rise of the gig economy," Review of Keynesian Economics, Edward Elgar Publishing, vol. 2(2), pages 171-188, April.
    11. Ambec, Stefan & Treich, Nicolas, 2007. "Roscas as financial agreements to cope with self-control problems," Journal of Development Economics, Elsevier, vol. 82(1), pages 120-137, January.
    12. Therese Wilson, 2012. "Supporting Social Enterprises to Support Vulnerable Consumers: The Example of Community Development Finance Institutions and Financial Exclusion," Journal of Consumer Policy, Springer, vol. 35(2), pages 197-213, June.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Filipiak, Ute, 2016. "Trusting financial institutions: Out of reach, out of trust?," The Quarterly Review of Economics and Finance, Elsevier, vol. 59(C), pages 200-214.
    2. Attanasio, Orazio & Meghir, Costas & Mommaerts, Corina & Zheng, Yu, 2025. "Growing apart: Declining within- and across-locality insurance in rural China," Journal of Development Economics, Elsevier, vol. 172(C).
    3. Flory, Jeffrey A., 2018. "Formal finance and informal safety nets of the poor: Evidence from a savings field experiment," Journal of Development Economics, Elsevier, vol. 135(C), pages 517-533.
    4. E. Bonhoure & R. Bawack, 2024. "Review of the Coverage of Financial Inclusion Research Since the Implementation of the Sustainable Development Goals: What Has Changed?," Post-Print hal-04828293, HAL.
    5. Dalla Pellegrina, Lucia & De Michele, Angela & Di Maio, Giorgio & Landoni, Paolo, 2021. "Fostering savings by commitment: Evidence from a quasi-natural experiment at The Small Enterprise Foundation in South Africa," World Development, Elsevier, vol. 148(C).
    6. Chowdhury, Shyamal & Chowdhury, Prabal Roy & Sengupta, Kunal, 2014. "Sequential lending with dynamic joint liability in micro-finance," Journal of Development Economics, Elsevier, vol. 111(C), pages 167-180.
    7. Mylonidis, Nikolaos & Chletsos, Michael & Barbagianni, Vanessa, 2019. "Financial exclusion in the USA: Looking beyond demographics," Journal of Financial Stability, Elsevier, vol. 40(C), pages 144-158.
    8. Bansi Malde & Marcos Vera-Hernández, 2022. "Spillovers of Community-Based Health Interventions on Consumption Smoothing," Economic Development and Cultural Change, University of Chicago Press, vol. 70(4), pages 1591-1629.
    9. Philip Kostov & Thankom Arun & Samuel Annim, 2014. "Financial Services to the Unbanked: the case of the Mzansi intervention in South Africa," Contemporary Economics, Vizja University, vol. 8(2), June.
    10. Alison Andrew & Orazio Attanasio & Britta Augsburg & Jere Behrman & Monimalika Day & Pamela Jervis & Costas Meghir & Angus Phimister, 2024. "Mothers’ Social Networks and Socioeconomic Gradients of Isolation," Economic Development and Cultural Change, University of Chicago Press, vol. 73(1), pages 487-522.
    11. Christian Ambrosius & Barbara Fritz & Ursula Stiegler, 2014. "Remittances for Financial Access: Lessons from Latin American Microfinance," Development Policy Review, Overseas Development Institute, vol. 32(6), pages 733-753, November.
    12. Marc Labie & Carolina Laureti & Ariane Szafarz, 2016. "Discipline and Flexibility: A Behavioral Perspective on Product Design in Microfinance," Working Papers CEB 15-020, ULB -- Universite Libre de Bruxelles.
    13. Agarwal, Sumit & Tantri, Prasanna & Vishen, Nitin, 2025. "Does social capital positively influence loan performance even during a crisis?," Journal of Development Economics, Elsevier, vol. 172(C).
    14. Zibei Chen & Minchao Jin, 2017. "Financial Inclusion in China: Use of Credit," Journal of Family and Economic Issues, Springer, vol. 38(4), pages 528-540, December.
    15. Becker, Sascha O. & Hoffmann, Mathias, 2010. "Equity fund ownership and the cross-regional diversification of household risk," Journal of Banking & Finance, Elsevier, vol. 34(1), pages 90-102, January.
    16. Yanhao Wei & Pinar Yildirim & Christophe Van den Bulte & Chrysanthos Dellarocas, 2016. "Credit Scoring with Social Network Data," Marketing Science, INFORMS, vol. 35(2), pages 234-258, March.
    17. Doruska, Molly, 2025. "Flood Risk and Differential Firm Investment: Evidence from Dakar, Senegal," 2025 AAEA & WAEA Joint Annual Meeting, July 27-29, 2025, Denver, CO 360980, Agricultural and Applied Economics Association.
    18. Evren Ceritoğlu, 2018. "Self-insurance and consumption risk-sharing between birth-year cohorts in Turkey," Review of Economics of the Household, Springer, vol. 16(4), pages 1085-1118, December.
    19. Anukriti, S & Herrera-Almanza, Catalina & Karra, Mahesh, 2022. "Bring a Friend: Strengthening Women's Social Networks and Reproductive Autonomy in India," IZA Discussion Papers 15381, IZA Network @ LISER.
    20. Tyler Girard, 2020. "Bank Accounts for All: How Do State Policies Matter?," Journal of International Development, John Wiley & Sons, Ltd., vol. 32(5), pages 793-818, July.

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;
    ;
    ;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:sae:anname:v:689:y:2020:i:1:p:46-64. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: SAGE Publications (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.