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The Rationale Behind Informal Finance: Evidence from Roscas in Bolivia

Author

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  • Sebastian Baixeras Donoso
  • Yener Altunbaş
  • Alper Kara

    (Bangor University, UK
    University of Hull, UK)

Abstract

We investigate the determinants of rosca participation in Bolivia by using a sample of 5,746 households. Evidence shows that in Bolivia rosca is a consumption driven phenomenon. The probability of participating in roscas increases parallel to households' income. Middle-income families with more members and higher expenses are more likely to join roscas. We also find that people who are likely to be excluded from formal credit instruments, such as younger individuals, females, less educated, and indigenous people, are more inclined to participate in roscas.

Suggested Citation

  • Sebastian Baixeras Donoso & Yener Altunbaş & Alper Kara, 2011. "The Rationale Behind Informal Finance: Evidence from Roscas in Bolivia," Journal of Developing Areas, Tennessee State University, College of Business, vol. 45(1), pages 191-208, July-Dece.
    • Handle: RePEc:jda:journl:vol.45:year:2011:issue1:pp:191-208
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    Citations

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    Cited by:

    1. Ashish Kumar Sedai, Rabindra Nepal, and Tooraj Jamasb, 2022. "Electrification and Socio-Economic Empowerment of Women in India," The Energy Journal, International Association for Energy Economics, vol. 0(Number 2).
    2. Fu, Jonathan, 2020. "Ability or opportunity to act: What shapes financial well-being?," World Development, Elsevier, vol. 128(C).
    3. Ha van Dung, 2014. "Short-term precaution, insurance and saving mechanisms in rural Vietnam," Working Papers CIE 82, Paderborn University, CIE Center for International Economics.

    More about this item

    Keywords

    Financial Exclusion; Informal Financial Institutions; Rosca; Bolivia;
    All these keywords.

    JEL classification:

    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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