Hybrid household finance: the use of formal and informal financial instruments in South Africa’s emerging middle class

Purpose This study examines how South Africa’s emerging middle-class households use formal and informal financial instruments in combination. While prior research often explains informal-finance use in terms of exclusion, low income or limited access to formal services, less is known about why banked and financially included middle-class consumers continue to use informal instruments alongside formal ones. Design/methodology/approach This study uses a qualitative design based on 25 interviews with emerging middle-class South African participants who used both formal and informal financial instruments. The data were analysed thematically. Findings The findings show that financial inclusion does not produce a simple transition from informal to formal finance. Instead, participants used formal and informal instruments in parallel, with formal products serving structured and long-term financial goals, while informal instruments remained valuable for flexibility, speed, trust, social embeddedness and crisis response. Informal finance therefore persisted not because respondents lacked formal access, but because it fulfilled needs that formal services did not fully meet. Originality/value The study contributes to household-banking and financial inclusion research by showing how financially included middle-class consumers maintain hybrid financial practices across sectors. It develops a 7Cs framework: convenience, cost, community, control, culture, credit availability and crisis to explain how households evaluate and combine formal and informal financial instruments.