In much of the developing world, rural poverty continues to be a problem. Rural people in developing countries often have poor financial literacy. This often leads to poor financial planning and limited financial service access. This condition has led to the rise of certain practices that ultimately burden already poor communities.
Financial management in villages, especially in developing countries, are usually done in rudimentary ways: such as stashing cash in piggy banks. The lack of formal financial institutions in rural areas are often superseded by more rudimentary parties that function as mediators between financial institutions and the rural people interested in using their services. These rural financial institutions are essentially middlemen and often operate at high rates, putting a heavy financial burden on the already impoverished rural people.
Even so, these village finance institutions are often the only financial access management services available to the rural poor. Due to this fact, these people live in financially marginalized communities that experience a vicious cycle of poverty.