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The Rationale Behind Informal Finance: Evidence from Roscas in Bolivia

Sebastian Baixeras Donoso, Yener Altunbas () and Alper Kara ()

Journal of Developing Areas, 2011, vol. 45, issue 1, 191-208

Abstract: We investigate the determinants of rosca participation in Bolivia by using a sample of 5,746 households. Evidence shows that in Bolivia rosca is a consumption driven phenomenon. The probability of participating in roscas increases parallel to households' income. Middle-income families with more members and higher expenses are more likely to join roscas. We also find that people who are likely to be excluded from formal credit instruments, such as younger individuals, females, less educated, and indigenous people, are more inclined to participate in roscas.

Keywords: Financial Exclusion; Informal Financial Institutions; Rosca; Bolivia (search for similar items in EconPapers)
JEL-codes: D14 G21 (search for similar items in EconPapers)
Date: 2011
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Handle: RePEc:jda:journl:vol.45:year:2011:issue1:pp:191-208