The Rationale Behind Informal Finance: Evidence from Roscas in Bolivia

Sebastian Baixeras Donoso, Yener Altunbas, Alper Kara

Research output: Contribution to journalArticle

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.
Original languageEnglish
Pages (from-to)191-208
Number of pages18
JournalThe Journal of Developing Areas
Volume45
Early online dateSep 2011
DOIs
Publication statusPublished - 2011
Externally publishedYes

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