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Title:Why use ROSCAs when you can use the banks? Theory and evidence from Ethiopia PDF Logo
Authors:Kedir, Abbi
Disney, Richard
Dasgupta, Indraneel
Issue Date:2011
Series/Report no.:CREDIT Research Paper 11/05
Abstract:Much of the existing literature on the use of informal credit arrangements such as ROSCAs (Rotating and Credit Saving Associations) theorises the use of such institutions as arising from market failures in the development of formal saving and credit mechanisms. As economic development proceeds, formal institutions might therefore be expected to displace ROSCAs. We show, using household data for Ethiopia, that in fact use of formal institutions and ROSCAs can co-exist, even in the same household. We examine usage of both formal and informal institutions across the household income gradient, and provide a theoretical model consistent with these empirical facts.
Subjects:Household saving
Credit institutions
ROSCAs
Ethiopia
JEL:O16
O17
Document Type:Working Paper
Appears in Collections:CREDIT Research Papers, The University of Nottingham

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