Enforcement in informal saving groups

@article{Anderson2009EnforcementII,
  title={Enforcement in informal saving groups},
  author={S. Anderson and J. Baland and K. Moene},
  journal={Journal of Development Economics},
  year={2009},
  volume={90},
  pages={14-23}
}
Informal groups cannot rely on external enforcement to insure that members abide by their obligations. It is generally assumed that these problems are solved by 'social sanctions' and reputational effects. The present paper focuses on roscas, one of the most commonly found informal financial institutions in the developing world. We first show that, in the absence of an external (social) sanctioning mechanism, roscas are never sustainable, even if the defecting member is excluded from all future… Expand
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