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ROSCA Participation in Benin: A Commitment Issue

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  • Olivier Dagnelie
  • Philippe LeMay-Boucher

Abstract

In the light of first-hand data from a Beninese urban household survey in Cotonou, we investigate several motives aiming to explain participation in Rotating Savings and Credit Associations (ROSCAs). We provide empirical findings which lead us to think that the main reason why individuals join a ROSCA is to commit themselves against self-control problems.

Suggested Citation

  • Olivier Dagnelie & Philippe LeMay-Boucher, 2007. "ROSCA Participation in Benin: A Commitment Issue," CERT Discussion Papers 0708, Centre for Economic Reform and Transformation, Heriot Watt University.
    • Handle: RePEc:hwe:certdp:0708
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    References listed on IDEAS

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    1. 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.
    2. Matthew Rabin & Ted O'Donoghue, 1999. "Doing It Now or Later," American Economic Review, American Economic Association, vol. 89(1), pages 103-124, March.
    3. Olivier Dagnelie, 2007. "Life and Death of Roscas : If Power Corrupts, Does Powerlessness Make One Blameless ?," Working Papers halshs-00077968, HAL.
    4. Faruk Gul & Wolfgang Pesendorfer, 2001. "Temptation and Self-Control," Econometrica, Econometric Society, vol. 69(6), pages 1403-1435, November.
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    6. Gugerty, Mary Kay, 2007. "You Can't Save Alone: Commitment in Rotating Savings and Credit Associations in Kenya," Economic Development and Cultural Change, University of Chicago Press, vol. 55(2), pages 251-282, January.
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    8. Handa, Sudhanshu & Kirton, Claremont, 1999. "The economics of rotating savings and credit associations: evidence from the Jamaican 'Partner'," Journal of Development Economics, Elsevier, vol. 60(1), pages 173-194, October.
    9. Siwan Anderson & Jean-Marie Baland, 2002. "The Economics of Roscas and Intrahousehold Resource Allocation," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 117(3), pages 963-995.
    10. Mary Kay Gugerty, 2007. "You Can't Save Alone: Commitment in Rotating Savings and Credit Associations in Kenya," Economic Development and Cultural Change, University of Chicago Press, vol. 55, pages 251-282.
    11. van den Brink, Rogier & Chavas, Jean-Paul, 1997. "The Microeconomics of an Indigenous African Institution: The Rotating Savings and Credit Association," Economic Development and Cultural Change, University of Chicago Press, vol. 45(4), pages 745-772, July.
    12. Nava Ashraf & Dean Karlan & Wesley Yin, 2006. "Tying Odysseus to the Mast: Evidence From a Commitment Savings Product in the Philippines," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 121(2), pages 635-672.
    13. Philippe LeMay-Boucher, 2007. "Insurance for the Poor: The Case of Informal Insurance Groups in Benin," CERT Discussion Papers 0707, Centre for Economic Reform and Transformation, Heriot Watt University.
    14. Siwan Anderson & Jean-Marie Baland, 2002. "The Economics of Roscas and Intrahousehold Resource Allocation," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 117(3), pages 963-995.
    15. Faruk Gul & Wolfgang Pesendorfer, 2004. "Self-Control and the Theory of Consumption," Econometrica, Econometric Society, vol. 72(1), pages 119-158, January.
    16. 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.
    17. Ambec, Stefan & Treich, Nicolas, 2007. "Roscas as financial agreements to cope with self-control problems," Journal of Development Economics, Elsevier, vol. 82(1), pages 120-137, January.
    18. David Laibson, 1997. "Golden Eggs and Hyperbolic Discounting," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 112(2), pages 443-478.
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    20. David I. Laibson, 1996. "Hyperbolic Discount Functions, Undersaving, and Savings Policy," NBER Working Papers 5635, National Bureau of Economic Research, Inc.
    21. Philippe LeMay-Boucher, 2007. "Inside Beninese Households: How Spouses Manage their Personal Income," CERT Discussion Papers 0705, Centre for Economic Reform and Transformation, Heriot Watt University.
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    Cited by:

    1. Muhammad Saqib & Sajjad Ahmad & Naila Nazir, 2017. "Informal Saving Organizations in Pakistan," International Journal of Academic Research in Business and Social Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Business and Social Sciences, vol. 7(8), pages 388-397, August.
    2. Karna Basu, 2011. "Hyperbolic Discounting and the Sustainability of Rotational Savings Arrangements," American Economic Journal: Microeconomics, American Economic Association, vol. 3(4), pages 143-171, November.
    3. Philippe LeMay-Boucher, 2007. "Inside Beninese Households: How Spouses Manage their Personal Income," CERT Discussion Papers 0705, Centre for Economic Reform and Transformation, Heriot Watt University.
    4. Philippe LeMay-Boucher, 2007. "Insurance for the Poor: The Case of Informal Insurance Groups in Benin," CERT Discussion Papers 0707, Centre for Economic Reform and Transformation, Heriot Watt University.

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    More about this item

    Keywords

    ROSCA; self-control; Benin;
    All these keywords.

    JEL classification:

    • G2 - Financial Economics - - Financial Institutions and Services
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements

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