ANNEX 3 DEFINITIONS OF FINANCIAL TOOLS IN THE SMALLHOLDER DIARIES Accumulating Savings and Credit Associations (ASCAs): Relatively more complex infor- mal savings groups (compared to ROSCAs, see below) that allow members to build up savings over time, lend the group fund to one another, and accumulate interest. A share- out typically occurs once a year when members divide the savings and earned interest among the group. Agricultural middleman credit or agent credit is a loan from an input supplier, usually with the understanding that repayment will be in cash or in-kind after that crop has been harvested. In Pakistan, these middlemen are known as arthis. Farmers sell produce to arthis and obtain fertilizer and pesticides on credit. They can also go to arthis to finance other major expenditures, such as weddings or emergencies. Borrowing from friends and family includes informal borrowing from their social network. Borrowing from an informal group includes borrowing from ASCAs and other community- led savings and credit groups. Business loans are loans in which someone borrows money for a business and is individu- ally liable for repaying the loan. Usually these loans are from banks, cooperatives, credit unions, or microfinance institutions if the borrower does not belong to a group. Checking accounts are current accounts with a formal commercial bank. Credit at a store is an arrangement whereby the shopkeeper lets a household member take goods now and pay later. A household member may buy a sack of flour from a shop- keeper on credit, for example, and promise to pay for it on his or her next visit to the shop. Credit given occurs when the respondent runs any type of small business and lets clients take items on credit and pay later. Hire purchase is when an individual purchases something from a shop but does not pay the full amount upfront. The good is taken first, usually upon payment of a deposit or an installment, and then the buyer continues paying installments over time until the good is paid off. Joint liability loan is when someone belongs to a group and the group has an account with a microfinance institution or bank that lends them money. The person may take a portion of that as a personal loan, but all the members of the group are guarantors. If the person stops paying, then all the group members are responsible for covering her debt. Layaways are financial tools in which a person pays in installments for a good, and ac- quires it only once all payments are made. Lending to friends and family is when members of the household or social network pro- vide others with financial services. 90 |