Islamic Finance

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.

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.

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.

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.

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.

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.

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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

Based on the categorical prohibition of ribā in the Qurān, presumably further reinforced by adīth, qar (loan) is considered ribawī, i.e., only gratuitous monetary loans are considered permissible. Deposits (particularly, demand deposits) in Islamic banks are often structured as qar asan, or wadīah/amānah (trust). Based on the Qurān, adīth and earliest Islamic discourse, this article examines whether qar is ribawī and whether the application of the concept of qar asan or wadīah/amānah is coherent in the context of Islamic finance. © 2011 Koninklijke Brill NV, Leiden.

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