Handa, Sudhanshu; Kirton, Claremont
Author Affiliation, Ana.
Department of Economics
The economics of rotating savings and credit associations: Evidence from the jamaican `partner'.
Journal of Development Economics
Date of Publication
Using a unique sample of rotating savings and credit association (Rosca) members from Jamaica, provides the first econometric tests of the recent theoretical advances in the literature of Rosca, and finds considerable support for an economic theory of Roscas. Findings include the fact that payments to the Rosca leader significantly enhance the sustainability of the Rosca and that the contractual relationships between the leader and other Rosca members is 'transaction cost minimizing' - when the degree of asset specificity is higher the contract is more flexible. Other theoretical predictions validated are the inverse relationship between size of the Rosca and size of contribution, and the use of Rosca funds for durable goods purchase.....