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Alternative financial vehicles: rotating savings and credit associations (ROSCAs)

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  • Christy Chung Hevener

Abstract

This paper describes how ROSCAs work and discusses the benefits that accrue to ROSCA participants and some of the costs they incur. Of particular interest is the introduction of a partial data set collected from a local ROSCA, which offers a glimpse of the capital costs ROSCA participants face and which could ultimately be contrasted with the capital costs faced by borrowers at mainstream financial institutions.

Suggested Citation

  • Christy Chung Hevener, 2006. "Alternative financial vehicles: rotating savings and credit associations (ROSCAs)," Community Affairs Discussion Paper 06-01, Federal Reserve Bank of Philadelphia.
  • Handle: RePEc:fip:fedpcd:06-01
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    File URL: http://www.phil.frb.org/community-development/publications/discussion-papers/discussionpaper-ROSCAs.pdf
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    References listed on IDEAS

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    1. Siwan Anderson & Jean-Marie Baland, 2002. "The Economics of Roscas and Intrahousehold Resource Allocation," The Quarterly Journal of Economics, Oxford University Press, vol. 117(3), pages 963-995.
    2. 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.
    3. Paul Huck & Sherrie L. W. Rhine & Philip Bond & Robert M. Townsend, 1999. "Small business finance in two Chicago minority neighborhoods," Economic Perspectives, Federal Reserve Bank of Chicago, issue Q II, pages 46-62.
    4. Levenson, Alec R. & Besley, Timothy, 1996. "The anatomy of an informal financial market: Rosca participation in Taiwan," Journal of Development Economics, Elsevier, vol. 51(1), pages 45-68, October.
    5. Ashok Rai & Stefan Klonner, 2007. "Adverse Selection in Credit Markets: Evidence from a Policy Experiment," Center for Development Economics 2007-01, Department of Economics, Williams College.
    6. Balkenhol B. & Gueye EH., 1994. "Tontines and the banking system: is there a case for building linkages?," ILO Working Papers 992997263402676, International Labour Organization.
    7. Ralph Chami and Jeffrey H. Fischer, 1995. "Community Banking, Monitoring, and the Clinton Plan," Cato Journal, Cato Journal, Cato Institute, vol. 14(3), pages 493-508, Winter.
    8. Stefan Klonner, 2000. "Rotating Savings and Credit Associations as Insurance," Econometric Society World Congress 2000 Contributed Papers 1589, Econometric Society.
    9. repec:ilo:ilowps:299726 is not listed on IDEAS
    10. Calomiris, Charles W. & Rajaraman, Indira, 1998. "The role of ROSCAs: lumpy durables or event insurance?," Journal of Development Economics, Elsevier, vol. 56(1), pages 207-216, June.
    11. Stefan Klonner, 2003. "Rotating Savings and Credit Associations When Participants are Risk Averse," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 44(3), pages 979-1005, August.
    12. Glenn C. Loury, 1976. "A Dynamic Theory of Racial Income Differences," Discussion Papers 225, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
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