The Practice of Rotating Saving and Credit Associations and Interest Rate Liberalization—A Case Study of Wenzhou

Rongzhu KE*, Min Ye

*Corresponding author for this work

    Research output: Contribution to journalArticlepeer-review

    1 Citation (Scopus)

    Abstract

    Rotating Saving and Credit Associations (ROSCA) is an important informal financial institution in developing economies. This article investigates the practice of ROSCA in Wenzhou as a case to explore how the interest rate is determined in a local credit market. We find that interest rates may vary across different purposes of credit demand (e.g., investment, insurance, or durable good consumption). The difference in credit demand may also drive participants to create alternative ROSCA and its implied interest rates are different accordingly. The case of ROSCA and its relationship with the local credit market may shed light on the financial market development and liberalization of interest rates during economic transition.

    Original languageEnglish
    Pages (from-to)155-170
    Number of pages16
    JournalChinese Economy
    Volume52
    Issue number2
    DOIs
    Publication statusPublished - 4 Mar 2019

    Scopus Subject Areas

    • Economics, Econometrics and Finance(all)

    User-Defined Keywords

    • interest rate
    • marketization
    • ROSCAS

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