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Pareto superior dimension of rotating savings and credit associations (ROSCAs) in Ghana: Evidence from Asunafo North Municipality of Ghana

Author

Listed:
  • Ernest AMANKWAH
  • Fritz Augustine GOCKEL
  • Eric OSEI-ASSIBEY
  • Alice NUBUOR

    (Ghana)

Abstract

This study investigates characteristics of Rotating savings and credit associations (ROSCAs) participants who join the association due to its Pareto superior allocation in Ghana. Some scholars like Dejene and Van den Brink have hypothesized that people join ROSCAs because of its Pareto superior allocation. The study employed primary data analysis in achieving its main objective. Out of the 400 ROSCA participants sampled for the study from Asunafo North Municipality of Ghana, 71.75% joined the association because of its Pareto superior allocation. A Probit model was used to predict the probability of joining the association due to its superior allocation. The dependent variable took the value of one when respondents join the association due to its superior allocation and zero if otherwise. Married participants, participants with no or low level of education, participants who are unemployed and participants who save more of their income are more likely to join ROSCA due to its Pareto superior allocation. It was recommended that that ROSCA participants who have access (participants living in urban sectors) to formal financial institutions, participants who have accounts at formal financial institutions, participants who are rich and aged participants should be educated on how ROSCA constitutes its Pareto superior allocation.

Suggested Citation

  • Ernest AMANKWAH & Fritz Augustine GOCKEL & Eric OSEI-ASSIBEY & Alice NUBUOR, 2019. "Pareto superior dimension of rotating savings and credit associations (ROSCAs) in Ghana: Evidence from Asunafo North Municipality of Ghana," Journal of Economics Library, EconSciences Journals, vol. 6(4), pages 287-309, December.
    • Handle: RePEc:cvv:journ5:v:6:y:2019:i:4:p:287-309
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    References listed on IDEAS

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    1. Joseph Owusu1 & Emmanuel Kwabena Anin & Solomon Gbene Zaato, 2013. "An Assessment of the Operations of Rotational Savings and Credit Association in the Kumasi Metropolis, Ghana," International Journal of Business and Social Research, LAR Center Press, vol. 3(7), pages 150-159, July.
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    Keywords

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    JEL classification:

    • B26 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - Financial Economics
    • D53 - Microeconomics - - General Equilibrium and Disequilibrium - - - Financial Markets
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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