The impact of strength of social ties on the economic actions of Roscas - evidence from Nairobi - Kenya

Abstract

This paper analyzes the factors contributing to the economic action ( whether for investment or welfare) of rotating and savings credit associations (ROSCAs). It has its main focus on the strength of the social ties between the members and the impact that this has on the economic action. It has been presumed that the strength of social ties between individuals in the ROSCA has an impact on the economic action they take. Questionnaires were issued out to gather relevant data on ROSCAs which were then ran as variables on a logit regression to establish their impact. The strength of the social tie was seen to be insignificant from the results, hence meaning that it has no impact on the economic action. The control variables used, age of members and economic action taken by ROSCAs has no relationship with the strength of the social ties between its members.