Year
1993
Country
United States
Language
English
Abstract
This paper analyzes the economic role and performance of a type of financial institution which is observed worldwide: rotating savings and credit associations (Roscas). Using a model in which individuals save for an indivisible durable consumption good, we study Roscas which distribute funds using random allocation and bidding. Each type of Rosca allows individuals without access to credit markets to improve their welfare, but under a reasonable assumption on references, random allocation is preferred when individuals have identical tastes. We also discuss the sustainability of Roscas given the possibility of default. -from Authors
English
ISSN/ISBN
28282
No. of Pages
792 - 810
Number
4
Volume
83
Select type of work
Name of the Journal
CIS Program Old
CIS publications
No
CIS Thesis
No