Does access to ROSCAs (Informal Savings) reduce vulnerabilities during COVID times? Evidence from Micro-entrepreneurs’ survey of Semi-Urban areas of Punjab

Abstract

The COVID-19 has exposed vulnerabilities in global economies impacting the marginalised communities the most. The lockdowns during the COVID has disrupted the means of credit interventions leading to increase in vulnerabilities of micro-entrepreneurs. However the role of informal credit interventions in such circumstances became critical. Therefore this thesis investigates the role of Rotating Savings and Credit Associations (ROSCAs), an informal saving mechanism, in mitigating vulnerabilities during the pandemic. This study utilizes primary data collected in June 2021 during peak COVID times, consisting of 508 households situated in Semi-urban areas of Lahore that include Atto Asal, Azad Town, Sue Asal, Khanoharni, Jhulky and Jhulky Sharif Park. Using Food vulnerability and Income vulnerability as dependent variables, the study examines whether access to Informal saving mechanisms (ROSCAs) and formal saving mechanisms reduce vulnerability among participants. The thesis investigates the impact of ROSCAs and Microfinance Institutions on household saving and financial stability during the COVID times. Our findings reveal that informal mechanisms ROSCAs in this case have a more profound impact in reducing vulnerabilities during COVID times compared to formal microfinance borrowers.