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Conference Proceeding

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Northeast Business and Economics Association (NBEA) 2018


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PUBLISHED BY THE NORTHEAST BUSINESS & ECONOMICS ASSOCIATION © 2018 The Northeast Business & Economics Association reserves the right to publish the Proceedings in both print and electronic formats. The individual authors retain the copyright over their own articles.


When immigrants need to save a large lump sum to purchase of home or for entrepreneurial efforts, many turn a “susu” or “partner” to build assets and secure middle-class status rather than mainstream financial services. This financial practice of pooling savings and credit based on an individual’s social connections is known as rotating savings and credit associations (ROSCAs). In these underground organized associations; participants agree to make regular contributions to an unregulated fund that participants then distribute, in whole or in part, to each contributor in rotation. Policymakers view ROSCAs as an informal or alternative financial service operating under the radar of regulations, even though one-third of the adult U.S. population are users (FDIC, 2014; OIG, USPS, 2014). Policymakers and the financial industry categorize consumers using informal or alternative financial services such as ROSCAs as “underbanked or unbanked” rather than “fully-banked.” This policy position reinforces the established poverty pathology around poor people and saving, while casting ROSCA users negatively. In contrast, ROSCA users view themselves as “fully-banked” by mixing and matching informal, alternative, and mainstream financial services; view the informal and alternatives sectors more formal and positive than acknowledged; and achieve greater success saving and accumulating wealth with ROSCAs

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