Trust and ROSCA membership in rural Cameroon

Abstract

A key element of Rotating Saving and Credit Associations (ROSCAs) is the trust which members must place in each other, and which replaces formal financial contracts in places where financial transactions costs are high. However, there is very little evidence on the relationship between trust and ROSCA membership. We address this issue using new experimental data from rural Cameroon. We find large and statistically significant differences between trust among ROSCA members and trust among other people. However, the demographic characteristics associated with ROSCA membership are rather different from the ones that explain variations in the level of experimental trust. Copyright © 2010 John Wiley & Sons, Ltd.