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Alternative Financial Services

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Alternative Financial Services

A shop window in Falls Church, Virginia.

Alternative financial services (AFS) are financial services provided outside traditional banking institutions, on which many low-income individuals depend.[1][2] In developing countries, these services often take the form of microfinance. In developed countries, the services may be similar to those provided by banks and include payday loans, rent-to-own agreements, pawnshops, refund anticipation loans, some subprime mortgage loans and car title loans, and non-bank check cashing, money orders, and money transfers. It also includes traditional moneylending by door-to-door collection.

Alternative financial services are typically provided by non-bank financial institutions, although person-to-person lending and crowd funding also play a role. These alternative financial service providers are estimated to process about 280 million transactions per year, representing roughly $78 billion in revenue. Customers include the Unbanked.

Alternative financial services in the United States,[1][2] for example via payday loans, are more extensive than in some other countries, because the major banks in the U.S. are less willing to lend to people with marginal credit ratings than their counterparts in many other countries.

In the United Kingdom, alternative financial services include Debt on our Doorstep campaign for improved regulation.

See also

References

  1. ^ a b Bradley, Christine; Burhouse, Susan; Gratton, Heather; Miller, Rae-Ann (Q1 2009), "Federal Reserve Board Academic Consultants Meeting on Non-traditional Financial Services, April 16, 2008", FDIC Quarterly ( 
  2. ^ a b Blank, Rebecca M. (April 16, 2008). "Federal Reserve Board Academic Consultants Meeting on Non-traditional Financial Services, April 16, 2008".  
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