Discrimination against the poor

Other Names:
Active prejudice towards people in poverty

Low-income households have practical difficulties in gaining access to credit because their economic characteristics differ from the usual requirements of financial institutions. For example, commercial lending institutions required that borrowers have a stable source of income out of which the principal and interest on loans can be paid according to the agreed terms. However, the income of may self-employed households is not stable, regardless of its size. Also a large number of small loans are needed to serve the poor, but lenders prefer dealing with large loans in small numbers to minimize administration costs. They also look for collateral with a clear title -- which many low-income urban households do not have. In additions, bankers, who are inherently conservative, tend to view low-income households as a bad risk, although many studies prove that they have a better repayment record than other income groups.

Broader Problems:
Social discrimination
Society Disadvantaged
Society People
Related UN Sustainable Development Goals:
GOAL 10: Reduced Inequality
Problem Type:
D: Detailed problems
Date of last update
04.10.2020 – 22:48 CEST