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Friends and benefits? Endogenous rotating savings and credit associations as alternative for women’s empowerment in India

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  • Sedai, Ashish Kumar
  • Vasudevan, Ramaa
  • Alves Pena, Anita

Abstract

This study examines the effects of Rotating Savings and Credit Associations (ROSCAs) on women’s socio-economic freedom and autonomy at the national level in India. We compare ROSCAs to agency based micro-credit schemes and analyze their effects using nationally representative longitudinal gender-disaggregated data from 2005 to 2012. Building on a theoretical model of household savings and spousal bargaining power, we use individual fixed effects and instrumental variable regressions to test the theoretical predictions. Results show that ROSCA membership increases the likelihood of women’s cash in hand for expenditure by 1.7 percentage points, say in major purchase decisions by 3.9 percentage points and fertility choice by 4.7 percentage points. These margins exceed those for exogenous micro-credit schemes and are robust to sensitivity tests. This study is the first to contrast ROSCAs with other micro-credit schemes at the national level. We propose scaling up and associating longstanding ROSCAs with self-help groups for more inclusive development.

Suggested Citation

  • Sedai, Ashish Kumar & Vasudevan, Ramaa & Alves Pena, Anita, 2021. "Friends and benefits? Endogenous rotating savings and credit associations as alternative for women’s empowerment in India," World Development, Elsevier, vol. 145(C).
    • Handle: RePEc:eee:wdevel:v:145:y:2021:i:c:s0305750x21001273
    DOI: 10.1016/j.worlddev.2021.105515
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    Cited by:

    1. Zelu, Barbara Ama & Iranzo, Susana & Pérez Laborda, Alejandro, 2022. "Financial Inclusion and Women Economic Empowerment in Ghana," Working Papers 2072/535075, Universitat Rovira i Virgili, Department of Economics.
    2. Small, Sarah F. & van der Meulen Rodgers, Yana, 2023. "The gendered effects of investing in physical and social infrastructure," World Development, Elsevier, vol. 171(C).
    3. Rediet Abebe & Adam Eck & Christian Ikeokwu & Samuel Taggart, 2022. "An Algorithmic Introduction to Savings Circles," Papers 2203.12486, arXiv.org.
    4. Pushkar Maitra & Ray Miller & Ashish Sedai, 2022. "Household Welfare Effects of ROSCAs," Monash Economics Working Papers 2022-14, Monash University, Department of Economics.

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    More about this item

    Keywords

    ROSCAs; Micro-credit; Women empowerment; Inclusive development;
    All these keywords.

    JEL classification:

    • D13 - Microeconomics - - Household Behavior - - - Household Production and Intrahouse Allocation
    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G41 - Financial Economics - - Behavioral Finance - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making in Financial Markets

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