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Household welfare effects of ROSCAs

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  • Maitra, Pushkar
  • Miller, Ray
  • Sedai, Ashish

Abstract

We examine the effects of Rotating Savings and Credit Associations (ROSCAs) on household welfare in India. The identification strategy is based on household fixed effects and instrumental variables (using the geographic leave-one-out instrument). We find that ROSCA membership increases household assets, consumption, energy efficiency and school expenditure, but only in rural areas. Welfare effects are stronger for poorer households and for those living in communities with stronger social ties. We argue that the persistence and success of ROSCAs depends on social ties, which are often stronger in rural communities.

Suggested Citation

  • Maitra, Pushkar & Miller, Ray & Sedai, Ashish, 2023. "Household welfare effects of ROSCAs," World Development, Elsevier, vol. 169(C).
    • Handle: RePEc:eee:wdevel:v:169:y:2023:i:c:s0305750x23001055
    DOI: 10.1016/j.worlddev.2023.106287
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    More about this item

    Keywords

    ROSCA; Household welfare; Community bonding; O12; C26; C33;
    All these keywords.

    JEL classification:

    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • C26 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Instrumental Variables (IV) Estimation
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models

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