ROSCAs As an Islamic Micro Finance Vehicle: The Concept, Key Drivers and Valuation

15 Pages Posted: 10 Mar 2019

Date Written: January 1, 2019

Abstract

This article empirically investigates the drives for participation in Jamey'ah (literally, Society) in Egypt as a kind of Rotating Savings and Credit Associations (ROSCAs) that agree in its general framework with Islamic principles. The article also evaluates the sample’s experience with it in order to understand the influence of gender and income on the motives behind Society sharing and their valuation. The findings show that the amounts raised by societies are allocated to essential expenses. The tough procedures in case of borrowing; and low return in case of saving were the drivers behind leaving banks to finance via Societies as the results strongly suggest. The valuation of Societies indicate apparent impressive positive trend as the results strongly suggest. There is considerable empirical evidence showing that Societies can be a substitute to banks in providing personal loans.

Keywords: Rotating Saving & Credit Associations, Cooperative Finance, Peer-to-Peer funding, Islamic Finance.

JEL Classification: G23, P460, P480

Suggested Citation

Al-Ajlouni, Ahmed, ROSCAs As an Islamic Micro Finance Vehicle: The Concept, Key Drivers and Valuation (January 1, 2019). Available at SSRN: https://ssrn.com/abstract=3340360 or http://dx.doi.org/10.2139/ssrn.3340360

Ahmed Al-Ajlouni (Contact Author)

Qassim University ( email )

Qassim University, Saudi Arabia
College of Sciences and Arts
Buraydah, 52571
Saudi Arabia

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