Abbi Mamo Kedir on Why use informal credit arrangements when you can use banks?

Speaker:  Abbi Mamo Kedir - University of Leicester
  Monday, December 17, 2012 at 12:30 PM Aula E, Palazzo di Economia

Much of the existing literature on the use of informal credit arrangements such as ROSCAs (Rotating Saving and Credit Associations) theorises that the use of such institutions arises from market failures in the development of formal saving and credit mechanisms. As economic development proceeds, formal institutions might therefore be expected to displace ROSCAs. We show, using household data for Ethiopia that in fact use of formal institutions and ROSCAs can co-exist, even within the same household. We examine usage of both formal and informal institutions across the household income gradient, and provide a theoretical model consistent with these empirical facts.

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Programme Director
Angelo Zago

Publication date
April 10, 2012

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