IDEAS home Printed from
   My bibliography  Save this paper

Bank-based investing RoSCA for Islamic finance: a new alternative to drain households savings and reduce financial exclusion


  • BOUSALAM, Issam
  • HAMZAOUI, Moustapha


On the arrival of the new banking law in Morocco, in august 2015, conventional banks and their foreign rivals will finally have the possibility to create their subsidiaries dedicated to microcredit, participative finance and payment, and hence, supply the market with new Islamic financial solutions for money saving and financing. In order to drain the substantial households savings escaping to classic banks, and consequently, gain ground among these latter, we think that those new Islamic finance operators should target, in almost equal proportions, people with no access to formal financing and those with religious convictions about interest rate prohibition in Islam. For this purpose, we conceptualized an innovative bank based model of Rotating Savings and Credit Associations that allows its members to invest their savings by means of the bank, and raise freeinterest rate loans with no application and management fees. In fact, The conception of this model relied on the results of a survey questionnaire we administered among 725 subjects from different social categories in Morocco to comprehend the inherent features of this informal practice (RoSCA) locally called "Daret". The first part of the answers gave us a basic data we used, by means of the two-way ANOVA (Analysis of the variance), to determine which social characteristics interact together to motivate a person to join a RoSCA. As for the second part of the answers, it gave us insights into the functioning of traditional RoSCAs in Morocco and their members preferences and perceptions on different scales. After all, we based on these findings to conceptualize the model taking into account both equity between members and sustainability of the operation. Additionally, unlike the traditional types of RoSCAs that rely on confidence and social links between members, this bank-based investing RoSCA allows people with no prior cognition to be gathered. This by introducing the bank as a guarantor and withdrawing, temporarily, a deposit for default risk to estimate by means of a risk-rating matrix we proposed. The model is, also, found to be more attractive regarding its real economy promotion through investment, risk sharing process, and integration of financially excluded households.

Suggested Citation

  • BOUSALAM, Issam & HAMZAOUI, Moustapha, 2015. "Bank-based investing RoSCA for Islamic finance: a new alternative to drain households savings and reduce financial exclusion," MPRA Paper 67510, University Library of Munich, Germany, revised 30 Oct 2015.
  • Handle: RePEc:pra:mprapa:67510

    Download full text from publisher

    File URL:
    File Function: original version
    Download Restriction: no

    References listed on IDEAS

    1. Abbi Kedir & Richard Disney & Indraneel Dasgupta, "undated". "Why Use Roscas When You Can Use Banks? Theory And Evidence From Ethiopia," Discussion Papers 11/05, University of Nottingham, CREDIT.
    2. Mohamed El Abdaimi, 1989. "Le financement informel. Problématique, typologie et évaluation à partir d'enquêtes à Marrakech et dans le Sud marocain," Revue Tiers Monde, Programme National Persée, vol. 30(120), pages 869-879.
    3. 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.
    4. Mark M. Pitt & Shahidur R. Khandker, 1998. "The Impact of Group-Based Credit Programs on Poor Households in Bangladesh: Does the Gender of Participants Matter?," Journal of Political Economy, University of Chicago Press, vol. 106(5), pages 958-996, October.
    Full references (including those not matched with items on IDEAS)

    More about this item


    RoSCA; Two-way ANOVA; Islamic finance; Default risk; Morocco.;

    JEL classification:

    • G2 - Financial Economics - - Financial Institutions and Services
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • 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

    NEP fields

    This paper has been announced in the following NEP Reports:


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:67510. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Joachim Winter). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.