Financial Management Focus on 'Cold' Money via Conventional Financing Methods versus 'Hot' Money Flow through Informal Financing Methods : Case Studies

Under the Group-scheme operated by the Small Farmers Development Programme (SFDP) in Nepal, the circumstances in which the Group Organizer (GO) is expected to carry out the ‘pre-investment survey' preclude him from obtaining any meaningful data on farmers incomes. The country's (Sri Lanka) financial system is fuelled on two types of funds: “hot” and “cold” money. ‘cold' money is that which comes from the State, and is often thought of as a real or potential subsidy. Loans from ‘hot' money are derived from cooperative members, savings and must, therefore, be handled carefully. Though it is an established fact that agricultural producers and cooperative members are eligible to have access to two capital markets -- institutional (through banking channels on conventional terms based on commercial considerations) and informal (through Isusu Trust Societies, etc., on non-conventional terms based on welfare motive) -- in reality, developing countries plagued with many economic difficulties and resultant financial problems find it very difficult to have access to institutional (conventional) financing (‘cold' money) facilities and are forced by circumstances to resort to informal financing institutions for easy ‘hot' money flow. The author after detailed research study has proposed a financial management model to handle the issue of informal financing (‘hot' money flow) through the proposed Isusu and Trust Society for executives in Nigeria