A Model of Bidding in Rotating Saving Credit Associations
DOI:
https://doi.org/10.37591/joprm.v7i1.3721Keywords:
Rosca, credit, saving, auction, group-lendingAbstract
The paper analyzes bidding behavior in discount bidding Roscas under the assumption of risk neutrality. Roscas are group based revolving financial schemes. In discount bidding Roscas, individuals bid for a lumpsum. We find that bids submitted by members in equilibrium are increasing in the returns or opportunities for investment. Further, members submit lower bids when credit is available outside Rosca at expensive rates. A bidding Rosca is efficient as an allocation mechanism.
Cite this Article
Indu Choudhary. A Model of Bidding in Rotating Saving Credit Associations.
Journal of Production Research and Management. 2017; 7(1): 11–15p.
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