Why do people participate in ROSCA saving schemes? Findings from a qualitative empirical study

Rotatory saving and credit associations (ROSCAs) are informal financing association serving the needs of many people, specifically those who had no access to formal financial markets, in developing economies. Researchers have addressed various aspects of ROSCA in different studies, while ignoring the identification of determinants of ROSCA participation. The purpose of this study is to identify and explore the determinants of ROSCA participation based on need-based setup, situational setting, and commitment mechanism. The qualitative analysis based on 14 semi-structured interviews from ROSCA participants of rural areas of Pakistan evidenced that the determinants vary between lower-class and middle-class communities. The lower-class community rely on ROSCA for their existence needs, relatedness needs, and social obligations, while middle-class community avail ROSCA opportunity for pursuing growth needs and relatedness needs. The middle-class community assumes ROSCA funding for achieving economic stability and to maintain social status. This study provides vital implication toward regularization of informal financing units in Pakistan.