The success of microfinance rests upon product simplicity, standardization, and the capacity to stimulate client discipline. However, poor people desperately need flexible financial products to improve their day-to-day money management and cope with shocks. This paper discusses how microfinance...

This paper starts from a puzzle. On the one hand, the literature documents that a large proportion of poor people are ready to forgo interest on rigid – or commitment – savings accounts to discipline their future selves. On the other, our stylized facts from Bangladesh show that microfinance...

Our equilibrium model determines the liquidity premium offered by a monopolistic bank to a pool of depositors made up of time-consistent and time-inconsistent agents. Time-consistent depositors demand compensation for illiquidity, whereas time-inconsistent ones are willing to forgo interest on...