ROSCA: An alternative informal credit source for wholesale and retail traders in Khyber Pakhtunkhwa, Pakistan

• Main Authors: Sabeel Khan, Ahmad Ali
• Format: Article
• Language: English
• Published: IDEA PUBLISHERS 2021-06-01
• Series: Liberal Arts and Social Sciences International Journal
• Subjects: ROSCA; financial markets; informal financial markets; wholesale traders; retail traders; descriptive statistics
• Online Access: https://ideapublishers.org/index.php/lassij/article/view/197

This paper attempts to explore the major informal source of fundraising for the wholesale and retail traders in the Khyber Pakhtunkhwa Province of Pakistan. Furthermore it examine a cost benefit analysis of joining ROSCA (Rotating Saving and Credit Association) from the society point of view. Primary data is collected by filling closed ended personally administered questionnaires from 250 respondents, garnered through the snowball method and selected through purposive sampling. Descriptive statistics, percentage method, is used for data analysis. An empirical example is also used to show cost benefit analysis of the participants of the ROSCA. The study find that 68 percent of respondents in the study area asserted that ROSCA is the only source of fundraising for them. Cost benefit analysis shows that the first 8 participants, out of a total of 12 participants, are better off in joining ROSCA and the last 4 participants are worse off. The study concluded that in the milieu where formal markets reluctant to cater to the needs of the small scale businesses, ROSCA plays an important role in fundraising for wholesale and retailers in the target area; and that society as a whole better off in joining ROSCA; rather than without it.