Access

You are not currently logged in.

Access your personal account or get JSTOR access through your library or other institution:

login

Log in to your personal account or through your institution.

If you need an accessible version of this item please contact JSTOR User Support

The Economics of Rotating Savings and Credit Associations

Timothy Besley, Stephen Coate and Glenn Loury
The American Economic Review
Vol. 83, No. 4 (Sep., 1993), pp. 792-810
Stable URL: http://www.jstor.org/stable/2117579
Page Count: 19
  • Download ($10.00)
  • Subscribe ($19.50)
  • Cite this Item
If you need an accessible version of this item please contact JSTOR User Support
The Economics of Rotating Savings and Credit Associations
Preview not available

Abstract

This paper analyzes the economic role and performance of a type of financial institution which is observed worldwide: rotating savings and credit associations (Roscas). Using a model in which individuals save for an indivisible durable consumption good, we study Roscas which distribute funds using random allocation and bidding. Each type of Roscas allows individuals without access to credit markets to improve their welfare, but under a reasonable assumption on preferences, random allocation is preferred when individuals have identical tastes. This conclusion need not hold when individuals are heterogeneous. We also discuss the sustainability of Roscas given the possibility of default.

Page Thumbnails

  • Thumbnail: Page 
792
    792
  • Thumbnail: Page 
793
    793
  • Thumbnail: Page 
794
    794
  • Thumbnail: Page 
795
    795
  • Thumbnail: Page 
796
    796
  • Thumbnail: Page 
797
    797
  • Thumbnail: Page 
798
    798
  • Thumbnail: Page 
799
    799
  • Thumbnail: Page 
800
    800
  • Thumbnail: Page 
801
    801
  • Thumbnail: Page 
802
    802
  • Thumbnail: Page 
803
    803
  • Thumbnail: Page 
804
    804
  • Thumbnail: Page 
805
    805
  • Thumbnail: Page 
806
    806
  • Thumbnail: Page 
807
    807
  • Thumbnail: Page 
808
    808
  • Thumbnail: Page 
809
    809
  • Thumbnail: Page 
810
    810