IDEAS home Printed from https://ideas.repec.org/a/kap/jfamec/v45y2024i2d10.1007_s10834-023-09912-0.html
   My bibliography  Save this article

‘Informal’ Financial Practices in the South Bronx: Family, Compadres, and Acquaintances

Author

Listed:
  • Antonieta Castro-Cosío

    (Duke University)

Abstract

This paper explores the role of ‘informal’ financial practices in shaping the resilience of immigrant urban communities, many of which are centered around families—nuclear, extended, and chosen. It looks at financial transactions and services, with particular attention to Rotating Credit and Savings Associations (ROSCAs), whose members are frequently related to each other through ties of kinship, especially in Hispanic circles. In a pioneering study documenting ROSCAs, they were defined as associations where members agree to make regular contributions of money to a fund that is given to each contributor in rotation. Because of their presence in various cultures and geographies, researchers from various disciplines have studied them, mostly in developing countries and immigrant communities within the United States. It is argued that such mechanisms substitute or complement formal financial services that do not fulfill their needs and play a key role in the infrastructures of immigrant communities to be resilient in the face of adverse circumstances. Findings from the present study’s fieldwork, conducted in one neighborhood in New York City’s South Bronx, show that these kinds of groups address the members’ short-term safety and resilience needs. However, given their low returns and unclear procedures to address wrongdoings, they entail higher risks for long term planning and social mobility. Nevertheless, given their persistent and organic nature across cultures and borders, they provide important insights to address those gaps and shed light on the contributions of family dynamics to the public domain.

Suggested Citation

  • Antonieta Castro-Cosío, 2024. "‘Informal’ Financial Practices in the South Bronx: Family, Compadres, and Acquaintances," Journal of Family and Economic Issues, Springer, vol. 45(2), pages 327-342, June.
  • Handle: RePEc:kap:jfamec:v:45:y:2024:i:2:d:10.1007_s10834-023-09912-0
    DOI: 10.1007/s10834-023-09912-0
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s10834-023-09912-0
    File Function: Abstract
    Download Restriction: Access to full text is restricted to subscribers.

    File URL: https://libkey.io/10.1007/s10834-023-09912-0?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Raj Chetty & Matthew O. Jackson & Theresa Kuchler & Johannes Stroebel & Nathaniel Hendren & Robert B. Fluegge & Sara Gong & Federico Gonzalez & Armelle Grondin & Matthew Jacob & Drew Johnston & Martin, 2022. "Social capital I: measurement and associations with economic mobility," Nature, Nature, vol. 608(7921), pages 108-121, August.
    2. Jacob S. Hacker & Gregory A. Huber & Austin Nichols & Philipp Rehm & Mark Schlesinger & Rob Valletta & Stuart Craig, 2014. "The Economic Security Index: A New Measure for Research and Policy Analysis," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 60(S1), pages 5-32, May.
    3. Besley, Timothy & Coate, Stephen & Loury, Glenn, 1993. "The Economics of Rotating Savings and Credit Associations," American Economic Review, American Economic Association, vol. 83(4), pages 792-810, September.
    4. Siwan Anderson & Jean-Marie Baland, 2002. "The Economics of Roscas and Intrahousehold Resource Allocation," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 117(3), pages 963-995.
    5. Sarah Bohn & Sarah Pearlman, 2013. "Ethnic Concentration and Bank Use in Immigrant Communities," Southern Economic Journal, John Wiley & Sons, vol. 79(4), pages 864-885, April.
    6. Anderson, Siwan & Baland, Jean-Marie & Moene, Karl Ove, 2009. "Enforcement in informal saving groups," Journal of Development Economics, Elsevier, vol. 90(1), pages 14-23, September.
    7. Sarah Bohn & Sarah Pearlman, 2013. "Ethnic Concentration and Bank Use in Immigrant Communities," Southern Economic Journal, Southern Economic Association, vol. 79(4), pages 864-885, April.
    8. Ambec, Stefan & Treich, Nicolas, 2007. "Roscas as financial agreements to cope with self-control problems," Journal of Development Economics, Elsevier, vol. 82(1), pages 120-137, January.
    9. Lori Beaman & Dean Karlan & Bram Thuysbaert, 2014. "Saving for a (not so) Rainy Day: A Ramdomized Evaluation of Savings Groups in Mali," Working Papers 1043, Economic Growth Center, Yale University.
    10. Sarah Bohn & Sarah Pearlman, 2013. "Ethnic Concentration and Bank Use in Immigrant Communities," Southern Economic Journal, John Wiley & Sons, vol. 79(4), pages 864-885, April.
    11. Fanny Salignac & Axelle Marjolin & Rebecca Reeve & Kristy Muir, 2019. "Conceptualizing and Measuring Financial Resilience: A Multidimensional Framework," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 145(1), pages 17-38, August.
    12. Siwan Anderson & Jean-Marie Baland, 2002. "The Economics of Roscas and Intrahousehold Resource Allocation," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 117(3), pages 963-995.
    13. Demirguc-Kunt, Asli & Klapper, Leora, 2012. "Measuring financial inclusion : the Global Findex Database," Policy Research Working Paper Series 6025, The World Bank.
    14. repec:bla:revinw:v:60:y:2014:i::p:s5-s32 is not listed on IDEAS
    15. Calomiris, Charles W. & Rajaraman, Indira, 1998. "The role of ROSCAs: lumpy durables or event insurance?," Journal of Development Economics, Elsevier, vol. 56(1), pages 207-216, June.
    16. Stefan Klonner, 2003. "Rotating Savings and Credit Associations When Participants are Risk Averse," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 44(3), pages 979-1005, August.
    17. Caroline SHENAZ HOSSEIN, 2013. "The Black Social Economy: Perseverance Of Banker Ladies In The Slums," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 84(4), pages 423-442, December.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. AMANKWAH, ERNEST & Gockel, Fritz Augustine & Osei-Assibey, Eric, 2019. "Pareto Superior dimension of Rotating Savings and Credit Associations (ROSCAs) in Ghana: Evidence from Asunafo North Municipality of Ghana," MPRA Paper 96308, University Library of Munich, Germany.
    2. Eun Jin Ryu & Aya Suzuki, 2021. "ROSCAS as Insurance: Comparing Formal and Informal Methods of Saving among the Unskilled Workers in the Ethiopian Cut‐Flower Industry," The Developing Economies, Institute of Developing Economies, vol. 59(3), pages 243-274, September.
    3. Baland, Jean-Marie & Guirkinger, Catherine & Hartwig, Renate, 2019. "Now or later? The allocation of the pot and the insurance motive in fixed roscas," Journal of Development Economics, Elsevier, vol. 140(C), pages 1-11.
    4. Kedir, Abbi M. & Disney, Richard & Dasgupta, Indraneel, 2011. "Why Use ROSCAs When You Can Use Banks? Theory and Evidence from Ethiopia," IZA Discussion Papers 5767, Institute of Labor Economics (IZA).
    5. Karna Basu, 2011. "Hyperbolic Discounting and the Sustainability of Rotational Savings Arrangements," American Economic Journal: Microeconomics, American Economic Association, vol. 3(4), pages 143-171, November.
    6. Rediet Abebe & Adam Eck & Christian Ikeokwu & Samuel Taggart, 2022. "An Algorithmic Introduction to Savings Circles," Papers 2203.12486, arXiv.org.
    7. Maitra, Pushkar & Miller, Ray & Sedai, Ashish, 2023. "Household welfare effects of ROSCAs," World Development, Elsevier, vol. 169(C).
    8. Pushkar Maitra & Ray Miller & Ashish Sedai, 2022. "Household Welfare Effects of ROSCAs," Monash Economics Working Papers 2022-14, Monash University, Department of Economics.
    9. Ambec, Stefan & Treich, Nicolas, 2007. "Roscas as financial agreements to cope with self-control problems," Journal of Development Economics, Elsevier, vol. 82(1), pages 120-137, January.
    10. Christy Chung Hevener, 2006. "Alternative financial vehicles: rotating savings and credit associations (ROSCAs)," Community Affairs Discussion Paper 06-01, Federal Reserve Bank of Philadelphia.
    11. Ha van Dung, 2014. "Short-term precaution, insurance and saving mechanisms in rural Vietnam," Working Papers CIE 82, Paderborn University, CIE Center for International Economics.
    12. Sedai, Ashish Kumar & Vasudevan, Ramaa & Alves Pena, Anita, 2021. "Friends and benefits? Endogenous rotating savings and credit associations as alternative for women’s empowerment in India," World Development, Elsevier, vol. 145(C).
    13. Olivier Dagnelie & Philippe Lemay‐Boucher, 2012. "Rosca Participation in Benin: A Commitment Issue," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 74(2), pages 235-252, April.
    14. Stefan Klonner, 2008. "Private Information and Altruism in Bidding Roscas," Economic Journal, Royal Economic Society, vol. 118(528), pages 775-800, April.
    15. Rabie, Dina, 2021. "RoSCAs in Egypt: A Banking Institution or a Commitment Device?," ILE Working Paper Series 52, University of Hamburg, Institute of Law and Economics.
    16. Olivier Dagnelie & Philippe LeMay-Boucher, 2007. "ROSCA Participation in Benin: A Commitment Issue," CERT Discussion Papers 0708, Centre for Economic Reform and Transformation, Heriot Watt University.
    17. Dalla Pellegrina, Lucia & De Michele, Angela & Di Maio, Giorgio & Landoni, Paolo, 2021. "Fostering savings by commitment: Evidence from a quasi-natural experiment at The Small Enterprise Foundation in South Africa," World Development, Elsevier, vol. 148(C).
    18. Dean Karlan & Aishwarya Lakshmi Ratan & Jonathan Zinman, 2014. "Savings by and for the Poor: A Research Review and Agenda," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 60(1), pages 36-78, March.
    19. Pascaline Dupas & Jonathan Robinson, 2013. "Why Don't the Poor Save More? Evidence from Health Savings Experiments," American Economic Review, American Economic Association, vol. 103(4), pages 1138-1171, June.
    20. Ksoll, Christopher & Lilleør, Helene Bie & Lønborg, Jonas Helth & Rasmussen, Ole Dahl, 2016. "Impact of Village Savings and Loan Associations: Evidence from a cluster randomized trial," Journal of Development Economics, Elsevier, vol. 120(C), pages 70-85.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:kap:jfamec:v:45:y:2024:i:2:d:10.1007_s10834-023-09912-0. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.