Variations of Rotating Savings and Credit Associations for Community Development

Informal financial cooperation strategies have emerged as a solution to improve the resilience of low-income communities, being one of the most popular ones the rotating savings and credit associations (ROSCAs). In this article, using computational tools and dynamical systems modeling, we study the...

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Autores:
Zambrano, Andres
Giraldo, Luis
Perdomo, Monica
Hernandez, Ivan
Godoy, Jesus
Tipo de recurso:
Article of investigation
Fecha de publicación:
2023
Institución:
Universidad de Ibagué
Repositorio:
Repositorio Universidad de Ibagué
Idioma:
eng
OAI Identifier:
oai:repositorio.unibague.edu.co:20.500.12313/5467
Acceso en línea:
https://hdl.handle.net/20.500.12313/5467
Palabra clave:
Cash reserve ratio (CRR)
Cooperation
Humanitarian engineering
Rotating Savings and Credit Associations (ROSCAs)
Social dilemmas
Trust
Rights
closedAccess
License
http://purl.org/coar/access_right/c_14cb
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repository_id_str
dc.title.spa.fl_str_mv Variations of Rotating Savings and Credit Associations for Community Development
title Variations of Rotating Savings and Credit Associations for Community Development
spellingShingle Variations of Rotating Savings and Credit Associations for Community Development
Cash reserve ratio (CRR)
Cooperation
Humanitarian engineering
Rotating Savings and Credit Associations (ROSCAs)
Social dilemmas
Trust
title_short Variations of Rotating Savings and Credit Associations for Community Development
title_full Variations of Rotating Savings and Credit Associations for Community Development
title_fullStr Variations of Rotating Savings and Credit Associations for Community Development
title_full_unstemmed Variations of Rotating Savings and Credit Associations for Community Development
title_sort Variations of Rotating Savings and Credit Associations for Community Development
dc.creator.fl_str_mv Zambrano, Andres
Giraldo, Luis
Perdomo, Monica
Hernandez, Ivan
Godoy, Jesus
dc.contributor.author.none.fl_str_mv Zambrano, Andres
Giraldo, Luis
Perdomo, Monica
Hernandez, Ivan
Godoy, Jesus
dc.subject.proposal.spa.fl_str_mv Cash reserve ratio (CRR)
Cooperation
Humanitarian engineering
Rotating Savings and Credit Associations (ROSCAs)
Social dilemmas
Trust
topic Cash reserve ratio (CRR)
Cooperation
Humanitarian engineering
Rotating Savings and Credit Associations (ROSCAs)
Social dilemmas
Trust
description Informal financial cooperation strategies have emerged as a solution to improve the resilience of low-income communities, being one of the most popular ones the rotating savings and credit associations (ROSCAs). In this article, using computational tools and dynamical systems modeling, we study the performance of two variations of ROSCAs that can potentially increase the resilience of communities. First, we propose a strategy that saves a percentage of the contributions of each member of the ROSCA to reduce the impact of individuals who stop contributing to the association and study how this strategy impacts the financial life of the individuals and trust among community members. Second, we study a decentralized version of the ROSCA in which individuals contribute to more than one association and analyze the impact of the size of the cooperation scheme and the number of associations where each individual participates. Through mathematical and simulation analyses, we show how the cooperation strategies impact the resilience of low-income communities.
publishDate 2023
dc.date.issued.none.fl_str_mv 2023-04-01
dc.date.accessioned.none.fl_str_mv 2025-08-14T20:10:05Z
dc.date.available.none.fl_str_mv 2025-08-14T20:10:05Z
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dc.identifier.citation.none.fl_str_mv Zambrano, A., Giraldo, L., Perdomo, M., Hernández, I y Godoy, J. (2023). Variations of Rotating Savings and Credit Associations for Community Development. IEEE Transactions on Computational Social Systems, 10(2), 614-622. 10.1109/TCSS.2022.3167266
dc.identifier.doi.none.fl_str_mv 10.1109/TCSS.2022.3167266
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identifier_str_mv Zambrano, A., Giraldo, L., Perdomo, M., Hernández, I y Godoy, J. (2023). Variations of Rotating Savings and Credit Associations for Community Development. IEEE Transactions on Computational Social Systems, 10(2), 614-622. 10.1109/TCSS.2022.3167266
10.1109/TCSS.2022.3167266
2329924X
2373-7476
url https://hdl.handle.net/20.500.12313/5467
dc.language.iso.none.fl_str_mv eng
language eng
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dc.relation.references.none.fl_str_mv A. V. Banerjee, A. Banerjee, and E. Duflo, Poor Economics: A Radical Rethinking of the Way to Fight Global Poverty. New York, NY, USA : Public Affairs, 2011.
E. J. Ryu and A. Suzuki, “ROSCAs as insurance: Comparing formal and informal methods of saving among the unskilled workers in the Ethiopian cut-flower industry,” Developing Economies, vol. 59, no. 3, pp. 243–274, Sep. 2021, doi: 10.1111/deve.12266.
A. K. Sedai, R. Vasudevan, and A. A. Pena, “Friends and benefits? Endogenous rotating savings and credit associations as alternative for women’s empowerment in India,” World Develop., vol. 145, Sep. 2021, Art. no. 105515. [Online]. Available: https://www.sciencedirect.com/science/article/pii/S0305750X21001273
L. Briguglio, “Conceptualizing and measuring economic resilience,” Building the Economic Resilience of Small States. Malta, U.K. : Islands and Small States Institute of the University of Malta and London: Commonwealth Secretariat, 2006, pp. 265–288.
D. Collins, J. Morduch, S. Rutherford, and O. Ruthven, Portfolios Poor: How World’s Poor Live \$ 2 a Day. Princeton, NJ, USA : Princeton Univ. Press, 2010.
A. R. Levenson and T. Besley, “The anatomy of an informal financial market: Rosca participation in Taiwan,” J. Develop. Econ., vol. 51, no. 1, pp. 45–68, Oct. 1996. [Online]. Available: https://www.sciencedirect.com/science/article/pii/S0304387896004257
S. Ardener, “The comparative study of rotating credit associations,” J. Roy. Anthropol. Inst. Great Britain Ireland, vol. 94, no. 2, pp. 201–229, 1964.
O. Dagnelie and P. Lemay-Boucher, “Rosca participation in benin: A commitment issue,” Oxford Bulletin Econ. Statist., vol. 74, no. 2, pp. 235–252, 2012.
P. Francois and M. Squires, “Linking mobile money networks to e-ROSCAs: An experimental study,” Sci. Adv., vol. 7, no. 1, Jan. 2021, Art. no. eabc5831. [Online]. Available: https://advances.sciencemag.org/content/7/1/eabc5831
F. Allahi, S. Taheri, R. Kian, and E. Sabet, “Cash-based interventions to enhance dignity in persistent humanitarian refugee crises: A system dynamics approach,” IEEE Trans. Eng. Manag., early access, Jul. 3, 2020, doi: 10.1109/TEM.2020.2982583.
H. G. Villasanti and K. M. Passino, “Feedback controllers as financial advisors for low-income individuals,” IEEE Trans. Control Syst. Technol., vol. 25, no. 6, pp. 2194–2201, Nov. 2017.
H. Gonzalez Villasanti, L. F. Giraldo, and K. M. Passino, “Feedback control engineering for cooperative community development: Tools for financial management advice for low-income individuals,” IEEE Control Syst. Mag., vol. 38, no. 3, pp. 87–101, Jun. 2018.
L. F. Giraldo and K. M. Passino, “Dynamics of cooperation in a task completion social dilemma,” PLoS ONE, vol. 12, no. 1, pp. 1–25, Jan. 2017.
A. F. Zambrano, “Donation networks in underprivileged communities,” IEEE Trans. Computat. Social Syst., vol. 8, no. 1, pp. 76–85, Feb. 2021.
M. Schreiner, “Formal RoSCAs in Argentina,” Develop. Pract., vol. 10, no. 2, pp. 229–232, May 2000.
C. Ikeokwu, “The mathematics of mutual aid: Robust welfare guarantees for decentralized financial organizations,” Ph.D. dissertation, Dept. Comput. Sci., Oberlin College, Oberlin, OH, USA, 2021.
N. L. Kerr, “Motivation losses in small groups: A social dilemma analysis,” J. Personality Social Psychol., vol. 45, no. 4, p. 819, 1983.
J. A. Shepperd, “Productivity loss in performance groups: A motivation analysis,” Psychol. Bull., vol. 113, no. 1, p. 67, 1993.
J. J. Jordan, M. Hoffman, M. A. Nowak, and D. G. Rand, “Uncalculating cooperation is used to signal trustworthiness,” Proc. Nat. Acad. Sci. USA, vol. 113, no. 31, pp. 8658–8663, Aug. 2016. [Online]. Available: https://www.pnas.org/content/113/31/8658
S. Anderson and J.-M. Baland, “The economics of ROSCAs and intrahousehold resource allocation,” Quart. J. Econ., vol. 117, no. 3, pp. 963–995, Aug. 2002.
F. Bouman, “Rosca: On the origin of the species/rosca: Sur l’origine du phenomène,” Savings Develop., vol. 19, no. 2, pp. 117–148, 1995.
S. Anderson, J.-M. Baland, and K. O. Moene. ( 2003 ). Sustainability and Organizational Design in Informal Groups, With Some Evidence From Kenyan ROSCAs. University of Oslo, Department of Economics, Oslo, Memorandum. [Online]. Available: http://hdl.handle.net/10419/63174
S. Rutherford, The Poor and Their Money. Oxford, U.K. : Oxford Univ. Press New Delhi, 2000.
B.-C. Egbide, “Rotating and savings credit association (ROSCAs): A veritable tool for enhancing the performance of micro and small enterprises in Nigeria,” Asian Econ. Financial Rev., vol. 10, no. 2, pp. 189–199, 2020.
B. Bilecen, “Altýn günü: Migrant women’s social protection networks,” Comparative Migration Stud., vol. 7, no. 1, pp. 1–17, 2019.
A. M. J. Sandsør, “The rotating savings and credit association-an economic, social and cultural institution,” M.S. thesis, Dept. Econ., Univ. Oslo, Oslo, Norway, 2010.
R. Hardin, Trust and Trustworthiness. New York, NY, USA : Russell Sage Foundation, 2002.
J. Berg, J. Dickhaut, and K. McCabe, “Trust, reciprocity, and social history,” Games Econ. Behav., vol. 10, no. 1, pp. 122–142, Jul. 1995.
A. B. Atkinson, “On the measurement of inequality,” J. Econ. Theory, vol. 2, no. 3, pp. 244–263, 1970.
M. A. Nowak and K. Sigmund, “Evolution of indirect reciprocity,” Nature, vol. 437, pp. 1291–1298, Oct. 2005.
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spelling Zambrano, Andres7303d41e-0cff-4c35-bd1d-f06dfc318c29-1Giraldo, Luis444be113-e22b-45bd-a86a-dd8e6b98fc84-1Perdomo, Monicab5271978-1330-4b7c-bbdb-4479949be10e-1Hernandez, Ivanecd094ef-9638-4943-a5cd-b1e8c6697f61-1Godoy, Jesusba9a0fd9-228e-44fb-959d-f36142425294-12025-08-14T20:10:05Z2025-08-14T20:10:05Z2023-04-01Informal financial cooperation strategies have emerged as a solution to improve the resilience of low-income communities, being one of the most popular ones the rotating savings and credit associations (ROSCAs). In this article, using computational tools and dynamical systems modeling, we study the performance of two variations of ROSCAs that can potentially increase the resilience of communities. First, we propose a strategy that saves a percentage of the contributions of each member of the ROSCA to reduce the impact of individuals who stop contributing to the association and study how this strategy impacts the financial life of the individuals and trust among community members. Second, we study a decentralized version of the ROSCA in which individuals contribute to more than one association and analyze the impact of the size of the cooperation scheme and the number of associations where each individual participates. Through mathematical and simulation analyses, we show how the cooperation strategies impact the resilience of low-income communities.application/pdfZambrano, A., Giraldo, L., Perdomo, M., Hernández, I y Godoy, J. (2023). Variations of Rotating Savings and Credit Associations for Community Development. IEEE Transactions on Computational Social Systems, 10(2), 614-622. 10.1109/TCSS.2022.316726610.1109/TCSS.2022.31672662329924X2373-7476https://hdl.handle.net/20.500.12313/5467engInstitute of Electrical and Electronics Engineers Inc.United States622261410A. V. Banerjee, A. Banerjee, and E. Duflo, Poor Economics: A Radical Rethinking of the Way to Fight Global Poverty. New York, NY, USA : Public Affairs, 2011.E. J. Ryu and A. Suzuki, “ROSCAs as insurance: Comparing formal and informal methods of saving among the unskilled workers in the Ethiopian cut-flower industry,” Developing Economies, vol. 59, no. 3, pp. 243–274, Sep. 2021, doi: 10.1111/deve.12266.A. K. Sedai, R. Vasudevan, and A. A. Pena, “Friends and benefits? Endogenous rotating savings and credit associations as alternative for women’s empowerment in India,” World Develop., vol. 145, Sep. 2021, Art. no. 105515. [Online]. Available: https://www.sciencedirect.com/science/article/pii/S0305750X21001273L. Briguglio, “Conceptualizing and measuring economic resilience,” Building the Economic Resilience of Small States. Malta, U.K. : Islands and Small States Institute of the University of Malta and London: Commonwealth Secretariat, 2006, pp. 265–288.D. Collins, J. Morduch, S. Rutherford, and O. Ruthven, Portfolios Poor: How World’s Poor Live \$ 2 a Day. Princeton, NJ, USA : Princeton Univ. Press, 2010.A. R. Levenson and T. Besley, “The anatomy of an informal financial market: Rosca participation in Taiwan,” J. Develop. Econ., vol. 51, no. 1, pp. 45–68, Oct. 1996. [Online]. Available: https://www.sciencedirect.com/science/article/pii/S0304387896004257S. Ardener, “The comparative study of rotating credit associations,” J. Roy. Anthropol. Inst. Great Britain Ireland, vol. 94, no. 2, pp. 201–229, 1964.O. Dagnelie and P. Lemay-Boucher, “Rosca participation in benin: A commitment issue,” Oxford Bulletin Econ. Statist., vol. 74, no. 2, pp. 235–252, 2012.P. Francois and M. Squires, “Linking mobile money networks to e-ROSCAs: An experimental study,” Sci. Adv., vol. 7, no. 1, Jan. 2021, Art. no. eabc5831. [Online]. Available: https://advances.sciencemag.org/content/7/1/eabc5831F. Allahi, S. Taheri, R. Kian, and E. Sabet, “Cash-based interventions to enhance dignity in persistent humanitarian refugee crises: A system dynamics approach,” IEEE Trans. Eng. Manag., early access, Jul. 3, 2020, doi: 10.1109/TEM.2020.2982583.H. G. Villasanti and K. M. Passino, “Feedback controllers as financial advisors for low-income individuals,” IEEE Trans. Control Syst. Technol., vol. 25, no. 6, pp. 2194–2201, Nov. 2017.H. Gonzalez Villasanti, L. F. Giraldo, and K. M. Passino, “Feedback control engineering for cooperative community development: Tools for financial management advice for low-income individuals,” IEEE Control Syst. Mag., vol. 38, no. 3, pp. 87–101, Jun. 2018.L. F. Giraldo and K. M. Passino, “Dynamics of cooperation in a task completion social dilemma,” PLoS ONE, vol. 12, no. 1, pp. 1–25, Jan. 2017.A. F. Zambrano, “Donation networks in underprivileged communities,” IEEE Trans. Computat. Social Syst., vol. 8, no. 1, pp. 76–85, Feb. 2021.M. Schreiner, “Formal RoSCAs in Argentina,” Develop. Pract., vol. 10, no. 2, pp. 229–232, May 2000.C. Ikeokwu, “The mathematics of mutual aid: Robust welfare guarantees for decentralized financial organizations,” Ph.D. dissertation, Dept. Comput. Sci., Oberlin College, Oberlin, OH, USA, 2021.N. L. Kerr, “Motivation losses in small groups: A social dilemma analysis,” J. Personality Social Psychol., vol. 45, no. 4, p. 819, 1983.J. A. Shepperd, “Productivity loss in performance groups: A motivation analysis,” Psychol. Bull., vol. 113, no. 1, p. 67, 1993.J. J. Jordan, M. Hoffman, M. A. Nowak, and D. G. Rand, “Uncalculating cooperation is used to signal trustworthiness,” Proc. Nat. Acad. Sci. USA, vol. 113, no. 31, pp. 8658–8663, Aug. 2016. [Online]. Available: https://www.pnas.org/content/113/31/8658S. Anderson and J.-M. Baland, “The economics of ROSCAs and intrahousehold resource allocation,” Quart. J. Econ., vol. 117, no. 3, pp. 963–995, Aug. 2002.F. Bouman, “Rosca: On the origin of the species/rosca: Sur l’origine du phenomène,” Savings Develop., vol. 19, no. 2, pp. 117–148, 1995.S. Anderson, J.-M. Baland, and K. O. Moene. ( 2003 ). Sustainability and Organizational Design in Informal Groups, With Some Evidence From Kenyan ROSCAs. University of Oslo, Department of Economics, Oslo, Memorandum. [Online]. Available: http://hdl.handle.net/10419/63174S. Rutherford, The Poor and Their Money. Oxford, U.K. : Oxford Univ. Press New Delhi, 2000.B.-C. Egbide, “Rotating and savings credit association (ROSCAs): A veritable tool for enhancing the performance of micro and small enterprises in Nigeria,” Asian Econ. Financial Rev., vol. 10, no. 2, pp. 189–199, 2020.B. Bilecen, “Altýn günü: Migrant women’s social protection networks,” Comparative Migration Stud., vol. 7, no. 1, pp. 1–17, 2019.A. M. J. Sandsør, “The rotating savings and credit association-an economic, social and cultural institution,” M.S. thesis, Dept. Econ., Univ. Oslo, Oslo, Norway, 2010.R. Hardin, Trust and Trustworthiness. New York, NY, USA : Russell Sage Foundation, 2002.J. Berg, J. Dickhaut, and K. McCabe, “Trust, reciprocity, and social history,” Games Econ. Behav., vol. 10, no. 1, pp. 122–142, Jul. 1995.A. B. Atkinson, “On the measurement of inequality,” J. Econ. Theory, vol. 2, no. 3, pp. 244–263, 1970.M. A. Nowak and K. Sigmund, “Evolution of indirect reciprocity,” Nature, vol. 437, pp. 1291–1298, Oct. 2005.© Copyright 2025 IEEE - All rights reserved, including rights for text and data mining and training of artificial intelligence and similar technologies.info:eu-repo/semantics/closedAccesshttp://purl.org/coar/access_right/c_14cbAtribución-NoComercial 4.0 Internacional (CC BY-NC 4.0)https://creativecommons.org/licenses/by-nc/4.0/https://ieeexplore.ieee.org/document/9761981Cash reserve ratio (CRR)CooperationHumanitarian engineeringRotating Savings and Credit Associations (ROSCAs)Social dilemmasTrustVariations of Rotating Savings and Credit Associations for Community DevelopmentArtículo de revistahttp://purl.org/coar/resource_type/c_2df8fbb1http://purl.org/coar/version/c_970fb48d4fbd8a85Textinfo:eu-repo/semantics/articleinfo:eu-repo/semantics/publishedVersionPublicationORIGINALArtículo.pdfArtículo.pdfapplication/pdf218154https://repositorio.unibague.edu.co/bitstreams/8a069a08-2644-4abb-b4d8-9db5bc431324/download11ffef1184e1e6fcd33ae07480b95460MD51LICENSElicense.txtlicense.txttext/plain; charset=utf-8134https://repositorio.unibague.edu.co/bitstreams/188b57ff-1b7f-4fe4-80a8-ae2eb5e1123c/download2fa3e590786b9c0f3ceba1b9656b7ac3MD52TEXTArtículo.pdf.txtArtículo.pdf.txtExtracted texttext/plain5572https://repositorio.unibague.edu.co/bitstreams/7719182f-a4fd-4814-b04f-973924a5506a/download05a65c881e157e31073e53979a70ed64MD53THUMBNAILArtículo.pdf.jpgArtículo.pdf.jpgIM Thumbnailimage/jpeg22558https://repositorio.unibague.edu.co/bitstreams/257994a8-5446-4f5c-8b16-1b3d460bfa42/downloadd2d27a2a5edfe27d3ff3879eba4c27b7MD5420.500.12313/5467oai:repositorio.unibague.edu.co:20.500.12313/54672025-08-19 09:35:56.367https://creativecommons.org/licenses/by-nc/4.0/© Copyright 2025 IEEE - All rights reserved, including rights for text and data mining and training of artificial intelligence and similar technologies.https://repositorio.unibague.edu.coRepositorio Institucional Universidad de Ibaguébdigital@metabiblioteca.comQ3JlYXRpdmUgQ29tbW9ucyBBdHRyaWJ1dGlvbi1Ob25Db21tZXJjaWFsLU5vRGVyaXZhdGl2ZXMgNC4wIEludGVybmF0aW9uYWwgTGljZW5zZQ0KaHR0cHM6Ly9jcmVhdGl2ZWNvbW1vbnMub3JnL2xpY2Vuc2VzL2J5LW5jLW5kLzQuMC8=

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