Reconceptualizing tontines as financial intermediaries: A systematic literature review

Abstract

This study reconceptualizes tontines, commonly viewed as informal savings clubs, as indigenous financial intermediaries. Drawing on a systematic literature review of 127 studies and using the Theory of Financial Intermediation (TFI) as an analytical lens, we show that tontines perform the core functions of intermediation by channeling funds from savers to borrowers while mitigating information asymmetry, transaction costs, risk transfer, and participation costs. Unlike banks, they rely on social capital – trust, reputation, and community enforcement – rather than contracts and regulation, revealing a social-capital-based pathway to intermediation. Their persistence across more than 100 countries underscores both their scale and effectiveness, yet they remain largely invisible in financial inclusion metrics and neglected in policy. Recognizing tontines as financial intermediaries reframes financial inclusion not as a matter of banking the unbanked, but of integrating institutions people already trust. Our findings open up avenues for hybrid models that blend indigenous and formal financial systems.