Friends and benefits?

We examine effects of Rotating Savings and Credit Associations (ROSCAs) on women’s socio-economic freedom and autonomy at the national level in India. Building on a theoretical model of household savings and spousal bargaining power, we use individual fixed effects and in- strumental variable regressions to test the theoretical predictions using IHDS, 2005-2012. Among others, results show that ROSCA membership increases the likelihood of women’s cash in hand for expenditure by 1.7 percentage points, say in major purchase decisions by 3.9 percentage points and fertility choice by 4.7 percentage points. These margins exceed those for exogenous micro- credit schemes and are robust to sensitivity tests. This study is first to contrast ROSCAs with other micro-credit schemes at the national level. We propose scaling up and associating longstanding ROSCAs with self-help groups for more inclusive development.

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