Resilience and Dynamism of Embedded Financial Transactions in Cameroon
Abstract: Following the recent financial crisis, institutional economists have issued a “call” for institutionalist research on alternative financial systems. While suggestions have been forthcoming, (for example, in Volume 48, Issue 4 of the Journal of Economic Issues), most have centered on national-level innovations in advanced capitalist countries, prompting further calls for “community” and individual level anti-capitalist financial relations. With this article, we respond to such calls. We show how networks of finance in Cameroon bridge the formal/informal dualisms in lending/savings activities. We demonstrate that any debates about whether to formalize informal financial institutions or leave them alone weaken in Cameroon because, through networks, people access both formal and informal financial institutions for different purposes and at various stages in the life of these institutions. This dynamism explains why, in spite of the growth of money markets in Cameroon, informal financial institutions have not disappeared, nor declined. In fact, they have expanded, contrary to predictions in existing new institutional economics research. While informal institutions have evolved, they have not necessarily become formal banks, microfinance, or stock markets. Rather, the informal financial institutions have adopted and adapted in terms of both lending and saving practices in a country where growing formal financialization has become the norm. Our findings challenge neoclassical and new institutional economics theories about money, credit, and the actors in the money market.