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This paper investigates individual motives to participate in rotating savings and credit associations (roscas). Detailed evidence of roscas in a Kenyan slum (Nairobi) shows that most roscas are predominantly composed of women. To explain this phenomenon, we propose an argument based on con°ictual interactions within the household, where husbands and wives have di®erential savings patterns due to di®erent valuations of an indivisible good. We test the empirical implications of the model using data collected from the Kenyan slum. ¤ Acknowledgement: We are grateful to the CRED and to the Mac Arthur Foundation for¯nancial support, particularly for the collection of¯eld data. We also thank members of the \Costs of inequality" research network, supported by the same Foundation, for many stimulating conversations and Patrick Francois for helpful discussions.

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From field observations of credit cooperatives in Cameroon, we find that 19% of the loans taken are fully collateralized by savings held in the same institutions. This behavior is costly to the borrower, as it represents a net interest payment of about 24% per year. While traditional explanations may partly explain this behavior, interviews with members of the cooperatives suggest the following new rationale: members resort to borrowing to signal to friends and relatives that they are poor and do not have savings available. By doing so, they can avoid requests for financial help. We develop a signaling model to analyze the conditions under which this behavior is an equilibrium outcome.