THE ANATOMY OF AN INFORMAL FINANCIAL MARKET - ROSCA PARTICIPATION IN TAIWAN

Little is known about informal financial markets in developing countri es. This paper analyzes participation in rotating savings and credit a ssociations using a national household survey from Taiwan. We find tha t participation is highest among high-income households. There is some evidence that income stability may play a role as well. Life cycle di fferences suggest a role in funding durables purchases. Our evidence i ndicates that roscas may be an alternative savings device to the forma l financial sector.