The anatomy of an informal financial market: Rosca participation in Taiwan

Little is known about informal financial markets in developing countries. This paper analyzes participation in rotating savings and credit associations using a national household survey from Taiwan. We find that participation is highest among high-income households. There is some evidence that income stability may play a role as well. Life cycle differences suggest a role in funding durables purchases. Our evidence indicates that roscas may be an alternative savings device to the formal financial sector.