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Self Help Groups: Use of modified ROSCAs in Microfinance

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Abstract

The paper documents the group lending mechanism used by a typical microfinance lender in Haryana, India. The mechanism had three interesting features. Firstly, the groups were initially formed as Rotating, Saving and Credit Associations. This enabled the lender to screen the groups. Second, there was significant heterogeneity within the group in terms of income and educational achievements. Third, the relatively wealthy individuals dominated the decision making process in the group and were able to obtain a disproportionate amount of credit allocated to the group.

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  • Kumar Aniket, 2005. "Self Help Groups: Use of modified ROSCAs in Microfinance," ESE Discussion Papers 137, Edinburgh School of Economics, University of Edinburgh.
  • Handle: RePEc:edn:esedps:137
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    1. Ghatak, Maitreesh & Guinnane, Timothy W., 1999. "The economics of lending with joint liability: theory and practice," Journal of Development Economics, Elsevier, vol. 60(1), pages 195-228, October.
    2. Robin Burgess & Rohini Pande, 2005. "Do Rural Banks Matter? Evidence from the Indian Social Banking Experiment," American Economic Review, American Economic Association, vol. 95(3), pages 780-795, June.
    3. Jain, Sanjay & Mansuri, Ghazala, 2003. "A little at a time: the use of regularly scheduled repayments in microfinance programs," Journal of Development Economics, Elsevier, vol. 72(1), pages 253-279, October.
    4. Besley, Timothy & Coate, Stephen & Loury, Glenn, 1993. "The Economics of Rotating Savings and Credit Associations," American Economic Review, American Economic Association, vol. 83(4), pages 792-810, September.
    5. Basu, Kaushik & Foster, James E, 1998. "On Measuring Literacy," Economic Journal, Royal Economic Society, vol. 108(451), pages 1733-1749, November.
    6. Hoff, Karla & Stiglitz, Joseph E, 1990. "Imperfect Information and Rural Credit Markets--Puzzles and Policy Perspectives," World Bank Economic Review, World Bank Group, vol. 4(3), pages 235-250, September.
    7. Besley, Timothy, 1995. "Savings, credit and insurance," Handbook of Development Economics,in: Hollis Chenery & T.N. Srinivasan (ed.), Handbook of Development Economics, edition 1, volume 3, chapter 36, pages 2123-2207 Elsevier.
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    Cited by:

    1. SODOKIN, Koffi, 2006. "La complémentarité des banques et des microbanques dans une approche de la comptabilité des flux et des stocks," LEG - Document de travail - Economie 2006-09, LEG, Laboratoire d'Economie et de Gestion, CNRS, Université de Bourgogne.

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