RoSCAs in Egypt: A Banking Institution or a Commitment Device?

Dina Rabie

No 52, ILE Working Paper Series from University of Hamburg, Institute of Law and Economics

Abstract: Rotating Savings and Credit Associations (RoSCAs) is a widely spread informal financial institution in developing countries. This paper examines how access to formal banking (or lack thereof), impatience and self-control are correlated with individuals' decisions to join RoSCAs. The paper employs an incentivized experiment to elicit impatience and a questionnaire to measure bank access, self-control and RoSCA participation among university employees in Cairo (Egypt). Findings indicate that access to formal banking significantly decreases the likelihood of RoSCA participation. In addition, behavioural attitudes partially (self-control but not impatience) correlates with the RoSCA participation decision. Conditional on RoSCA participation, behavioural attitudes towards self-control and impatience are significant correlates of whether an individual is a saver or a borrow in the informal institution.

Keywords: RoSCAs; RoSCA rank; informal banking; impatience; self-control (search for similar items in EconPapers)
JEL-codes: C91 D14 O17 (search for similar items in EconPapers)
Date: 2021
New Economics Papers: this item is included in nep-ara, nep-ban, nep-exp, nep-isf, nep-iue and nep-mfd
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:ilewps:52

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