How can precautionary savings be explained under rationality

Reference no: EM131916089

Problem

1. Women in many poorer regions are less likely than their husbands to hold savings accounts. Suggest three reasons that might explain why women are at present less likely to open savings accounts in commercial banks. How easy would it be to change the status quo?

2. As discussed in chapter 3, ROSCAs are very common across poor and middle income countries. How can precautionary savings be explained under the rationality paradigm? Are precautionary savings always an "optimal" decision in low-income economies? Drawing on lessons from behavioral economics, provide an example of a saving product that can improve upon the status quo when offered as a component of a microfinance program.

Reference no: EM131916089

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