Determinants of Informal Credit Use: A Cross Country Study

Yaldiz, Elmas; Altunbaş, Yener; Bazzana, Flavio

doi:10.2139/ssrn.1917596

Cited by 2 publications

(3 citation statements)

References 0 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…This finding concurs with reports of Tsai (2004); Yaldiz et al (2011); Batini et al (2010) who posited that restrictive requirements to use formal finance increases informal finance use.…”

Section: Factors Influencing Member's Participation In Roscassupporting

confidence: 91%

“…The entrepreneurs interviewed felt that the collateral requirements, high interest rates and documentation required by FFIs were too burdensome. As a result of this, they developed negative attitudes towards formal financial institutions .This finding supported the assertions of Turvey and Kong (2010); Yaldiz et al (2011); Johnson and Nino-Zarazua (2008) who reported that the negative attitude exhibited by entrepreneurs towards formal financial institutions drove them to participate in ROSCA Additionally, internal regulations of formal financial institutions exhibited positive and significant influence on ROSCA participation. Rigid and cumbersome know your customer, (KYC) requirements such as too much documentation, inflexibility, collateral requirements, requirement of guarantors, negatively impacted individual borrowing from formal institutions but positively influenced members participation in ROSCA.…”

Section: Factors Influencing Member's Participation In Roscassupporting

confidence: 78%

See 1 more Smart Citation

Rotating and Savings Credit Association (ROSCAs): A Veritable Tool for Enhancing the Performance of Micro and Small Enterprises in Nigeria

Ben-Caleb

Adegboyegun

et al. 2020

Asian Economic and Financial Review

View full text Add to dashboard Cite

ROSCAs are informal financial institutions serving the financial needs of many people especially in developing countries. They provide an alternative through which entrepreneurs raise funds to support their business operations. Therefore, this study evaluated the relationship between ROSCAs participation and MSEs performance in Nigeria. A sample of 240 ROSCAs members was selected using stratified random sampling. Data were analysed using Frequency and Percentages, Regression analysis and Goodman and Kruskal"s gamma statistics. Findings showed that significant and positive relationship exist between ROSCAs participation and MSEs performance (G = 0.768, p< .005). By establishing this connection, the analysis elucidates the prominent role of ROSCAs in enhancing MSEs performance. Additionally, this paper discusses factors influencing participation in ROSCAs and the implications on ROSCAs existence. Internal regulations of Formal Financial Institutions (FFIs) influence ROSCAs participation positively and significantly while income, level of education and attitude of ROSCAs members" impacts significantly but negatively on ROSCAs participation. This study examines rationale for joining ROSCAs and findings indicate that financial motives outweigh all other motives. Our analysis suggested that ROSCAs participation is beneficial because it serves as a mechanism for saving, provides capital with little or no interest, strengthens networks and helps to accumulate assets. Consequentially, it would be important for policy reforms to integrate ROSCAs to FFIs rather than seeking to eliminate them in order to pave way for appropriate linkages and integration of the two systems. Contribution/ Originality: This study is one of very few studies which have examined the motives for ROSCAs participation among entrepreneurs in Nigeria.

show abstract

“…This finding concurs with reports of Tsai (2004); Yaldiz et al (2011); Batini et al (2010) who posited that restrictive requirements to use formal finance increases informal finance use.…”

Section: Factors Influencing Member's Participation In Roscassupporting

confidence: 91%

Section: Factors Influencing Member's Participation In Roscassupporting

confidence: 78%

Rotating and Savings Credit Association (ROSCAs): A Veritable Tool for Enhancing the Performance of Micro and Small Enterprises in Nigeria

Ben-Caleb

Adegboyegun

et al. 2020

Asian Economic and Financial Review

View full text Add to dashboard Cite

show abstract

“…In this paper we measure informal financial inclusion with households' borrowing and lending activity in the informal financial sector. Different from existing studies that examine the determinants of financial inclusion from the traditional perspectives of age, income, gender, education level, and perceived risk (Mwangi and Sichei 2011;Yaldiz, Altunbas, and Bazzana 2011), we consider three new drivers: social networks, proximity to formal institutions, and the interaction of the two. These new attempts extend our understanding of how Guanxi alleviates credit constraints, how the thriving of formal finance affects informal finance, and how the impact of Guanxi on informal finance changes with the development of formal finance.…”

mentioning

confidence: 99%

Social Networks and Informal Financial Inclusion in the People's Republic of China

et al. 2018

View full text Add to dashboard Cite

Using the 2011 China Household Finance Survey (CHFS) database, we explore the heterogeneous impacts of social networks on informal financial inclusion for urban and rural households in the PRC. We find that social networks significantly increase the probability of households' participation in the informal financial market, augment the size of informal financial transactions, and raise the ratio of informal lending to total household assets. We also identify the mechanisms through which social networks affect households' participation in the informal financial market. By reducing the information cost, perceived risk, and precautionary saving, social networks play a larger role for urban households than for rural households. Notably, the effects of social networks on informal finance are strengthened by the development of the formal financial market.

show abstract

Determinants of Informal Credit Use: A Cross Country Study

Cited by 2 publications

References 0 publications

Rotating and Savings Credit Association (ROSCAs): A Veritable Tool for Enhancing the Performance of Micro and Small Enterprises in Nigeria

Rotating and Savings Credit Association (ROSCAs): A Veritable Tool for Enhancing the Performance of Micro and Small Enterprises in Nigeria

Social Networks and Informal Financial Inclusion in the People's Republic of China

Contact Info

Product

Resources

About