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 incom...

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Bibliographic Details
Published in:Journal of development economics 1996-10, Vol.51 (1), p.45-68
Main Authors: Levenson, Alec R., Besley, Timothy
Format: Article
Language:English
Subjects:
Capital market
Credit
Developing countries
Development economics
Economic conditions
Economic theory
Finance
Financial services
Informal sector
LDCs
Participation
Personal finance
Polls & surveys
Savings
Securities markets
Studies
Taiwan
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Summary: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.
ISSN:0304-3878
1872-6089
DOI:10.1016/S0304-3878(96)00425-7