Articles

Purpose: The purpose of this paper is to examine the growth of Islamic microfinance (bila sudi-qardh) scheme in Andaman Islands and to see how Islamic microfinance sector and social capital contribute to face the challenge in poverty alleviation. Design/methodology/approach: The researcher developed a questionnaire and conducted non-random survey with the samples of Islamic microfinance group members to examine the Islamic microfinance and cash

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The performance and efficiency of random and bidding rotating savings and credit association (roscas) are compared within a game theoretic model. Information about individuals return from investing the rosca pool is assumed to be asymmetric and imperfect, and rosca members are allowed to use funds raised outside the rosca to supplement the funds raised in the rosca.

Rotating savings and credit associations (RoSCAS) have been studied in many low income countries, but relatively little published information is available about them in Latin America. RoSCAS are informal arrangements through which groups of individuals save, share risks, and also borrow. In mid-1987, we studied RoSCAS in five of the largest cities in Bolivia through interviews with participants as well as with organizers. We found that a sizable portion of the urban-adults in Bolivia are, or have been, members of RoSCAS - one-third or more.

Relative to female entrepreneurs in the Ghanaian context, are Zimbabwean female entrepreneurs as prepared to advance their own material conditions, constitute a commercial class, and contribute to overall economic development? This article addresses that question by exploring the historical and cultural forces that help to shape the context in which Shona female entrepreneurs operate, as well as the strategies market traders have developed in order to respond to this context.

Informal groups cannot rely on external enforcement to insure that members abide by their obligations. It is generally assumed that these problems are solved by 'social sanctions' and reputational effects. The present paper focuses on roscas, one of the most commonly found informal financial institutions in the developing world. We first show that, in the absence of an external (social) sanctioning mechanism, roscas are never sustainable, even if the defecting member is excluded from all future roscas.

The stylised representation of ROSCAs in recent theoretical work as a device driven by impatience for lumpy consumer durables misses the important insurance role of this pervasive informal financial institution in the developing world. That insurance role explains why ROSCAs with concurrent bidding are the dominant means of determining the sequence and pricing of allocations. In ROSCAs so structured, the recipient and the implied interest rate for each period's allotment are determined by competitive bids at the time of distribution.

Theoretical arguments suggest that rotating savings and credit associations (ROSCAs) improve welfare by reducing the utility cost of saving for a consumer durable. Data from two communities in East Africa reveal major differences in the incidence of ROSCAs participation arising, conjecturally, from differences in the relative depths of market penetration and perceptions about the efficacy of alternative strategies for compensating for failures in the financial markets.

We consider a model in which people with limited self-control can sign binding financial agreements among themselves, thereby forming coalitions. We show that these financial agreements may help them to alleviate their self-control problems. We then demonstrate that there exists a stable structure of coalitions in which people form rotating savings and credit associations (roscas). We therefore provide a behavioral rationale for one of the most prevalent and puzzling financial institutions in developing countries. Finally, we derive and discuss some empirical predictions.

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.