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RoSCAs in Egypt: A Banking Institution or a Commitment Device?

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  • Rabie, Dina

Abstract

Rotating Savings and Credit Associations (RoSCAs) is a widely spread informal financial institution in developing countries. This paper examines how access to formal banking (or lack thereof), impatience and self-control are correlated with individuals' decisions to join RoSCAs. The paper employs an incentivized experiment to elicit impatience and a questionnaire to measure bank access, self-control and RoSCA participation among university employees in Cairo (Egypt). Findings indicate that access to formal banking significantly decreases the likelihood of RoSCA participation. In addition, behavioural attitudes partially (self-control but not impatience) correlates with the RoSCA participation decision. Conditional on RoSCA participation, behavioural attitudes towards self-control and impatience are significant correlates of whether an individual is a saver or a borrow in the informal institution.

Suggested Citation

  • Rabie, Dina, 2021. "RoSCAs in Egypt: A Banking Institution or a Commitment Device?," ILE Working Paper Series 52, University of Hamburg, Institute of Law and Economics.
  • Handle: RePEc:zbw:ilewps:52
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    References listed on IDEAS

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    More about this item

    Keywords

    RoSCAs; RoSCA rank; informal banking; impatience; self-control;
    All these keywords.

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements

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