Micro study of low-income households in India: a poverty expectation hypothesis?

Purpose - The purpose of this paper is to explore whether existing theories on saving behaviour and empirical findings on the determinants of saving behaviour can be generalised for the low-income households in developing countries. Design/methodology/approach - The paper adopts Van Manen’s hermeneutic phenomenology approach. Semi-structured interviews were conducted with female household members that belong to low-income households and do not have any member of the household with a permanent job. Interviews were conducted in the cities of Bangalore and Indore in India. Lived experience of participants was captured using conversational interviews and thematic analyses. Findings - The paper provides evidence that the existing literature on saving behaviour is inadequate in explaining either the saving behaviour or the determinants for saving for low-income households in developing countries. This paper finds evidence of poor institutional access and reliance on informal financial intermediaries for low-income households. Research limitations/implications - This paper establishes the need for a qualitative study with a large sample size to determine the policy interventions and institutional drivers that will encourage low-income households to migrate from the informal financial intermediaries to formal banking institutions. Originality/value - To the best of author’s knowledge, this is the first qualitative paper aimed at understanding saving behaviour of low-income households. Extant literature is focused on normative economic frameworks that bear limited relation to the contextual realities of low-income households in the developing countries.