That the very poor of the world have been largely unbanked is entirely true. As is it almost certainly a good thing that they gain access to banking services. But it's not, not so much at least, the ability to borrow which is most desired, it's the ability to save:
As a sex worker in Kolkata, Rita Roy had no access to her own money. The brothel madam kept her earnings “safe” – shoving the notes into her bra – and whenever Roy needed money, she would never get the full amount she asked for.
Roy, 36, did not have a bank account. When she needed money to treat her father’s heart condition seven years ago, she was forced to visit a loan shark to borrow 2,000 rupees (£23). In one year, 13,000 rupees extra (£150) was due from the interest.
“When I couldn’t repay it, the money lender posted two men outside the kotha[brothel] to harass me every time I went out to shop,” says Roy. But now she has a bank account with the Usha Multipurpose Cooperative Society, which is run by and for sex workers. It began with 13 women pooling their savings – 30,000 rupees – in 1995. Today, the bank’s turnover is 300m rupees a year and it has a membership of 31,000 sex workers from across West Bengal.
We've seen much the same thing in other such adventures, Grameen Bank in Bangladesh, M-Pesa in East Africa. A secure method of transacting is desired, sure, some would like to borrow to invest or consume. But the thing which really has the poor beating down the doors of a financial system is a safe and secure method of savings.
One lesson of which is that - again - Milton Friedman was right. When a middle aged (for that place she is) woman turning tricks for pennies is looking to save them we think that there must, quite obviously, be a large amount of truth in both the lifetime income hypothesis and in the smoothing of it that people wish to do.
Like so many descriptions of human behaviour we'd not say that it is 100% universal across all people all of the time. But most certainly enough that it's a reasonable description of human behaviour. It also has certain implications for policy - one of the best ways of enabling the poor it to create a system in which they can save, not necessarily borrow.