Analysis and design of microfinance services: A case of ROSCA

Dohyun Ahn, Wanmo Kang, Kyoung-Kuk Kim and Hayong Shin

The Engineering Economist, 2017, vol. 62, issue 3, 197-230

Abstract: Rotating savings and credit association (ROSCA) is a well-known microfinance association widely used in many countries around the world with long histories. By considering extra profits that such a system can provide when compared to banking transactions, we develop optimization problems to achieve an optimal design of a ROSCA. We find that ROSCAs might attract investors when deposit and loan rates from formal banking systems are not favorable. Furthermore, optimal rates and optimal orders to maximize system outputs are reported.

Date: 2017
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DOI: 10.1080/0013791X.2016.1236305

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