| Abstract: |
What is the optimal size and composition of Rural Savings and Credit
Cooperatives (RuSACCOs)? With these broader questions in mind, we characterize
alternative formation of RuSACCOs and their implications in improving rural
households access to financial services, including savings, credit and
insurance services. We find that some features of RuSACCOs have varying
implications for delivering various financial services (savings, credit and
insurance). We find that the sizes of RuSACCOs have nonlinear and varying
implications across the various financial services that RuSACCOs provide. We
also show that compositional heterogeneity among members (including diversity
in wealth) is associated with higher access to credit services, while this has
little (no) implication on households savings behavior. Similarly, strong
social cohesion among members is strongly associated with higher access to
financial services, particularly savings and credit access. These empirical
characterizations suggest that the optimal size and composition of RuSACCOs
may vary across the domains of financial services they are meant to provide.
The results provide some insights into rural microfinancing operations and
saving cooperatives which are striving to satisfy members demand for financial
services. Acknowledgement : The authors gratefully acknowledge the financial
support from the International Growth Center (IGC) through the Ethiopian
country program. We also appreciate the support and comments from the IGC
Ethiopia team. All remaining errors are ours |