ABSTRACT
This chapter begins with a brief analysis of types of housing finance institution in order to put the position of developing countries in context. It considers the development of retail financial institutions and housing finance in developing countries, before concentrating on the need to encourage the mobilization of savings and how this can be achieved. The question of whether the promotion of housing and housing finance can contribute to economic development is one on which there is no unanimity between economists. Informal housing finance is very much a second best solution and can never be as efficient as an efficient formal system. Perhaps the most important requirement for public policy is to recognize the role of the informal sector, from financing within families to more formal rotating credit societies and other arrangements. The direct action that formal institutions can take to mobilize saving is dependent on the framework within which they can operate.
