The ROSCAs Participation and their Influence on Financial Position of Business

Abstract

The role of Small and Medium Size enterprises (SMEs) becoming more prominent all over the world. The most crucial and larger part of the world economies are SMEs. Rotated Savings and Credit Association (ROSCA) is cheap source of finance for SMEs. This study investigates Rotated Savings and Credit Association as a source of finance for SMEs. The objective of the study is to explore the participation of SMEs in Savings and Credit Associations and the influence of Savings and Credit Associations on the financial position of the business. To explore these issues, mix method was used for data collection through self-administered questionnaire and interview from Mingora City in district Swat. Total 200 questionnaires were distributed; response rate was 70%. Sample was selected through snow-ball sampling method. Frequency distribution and charts are used for presentation of data. Cross tabulation, chi-square and fisher exact test are used for checking the associations. The results illustrate that all types of businesses participated in committee, but majority are sole proprietorship. Businesses invest majority of their ROSCAs funds in existing businesses rather than other opportunities. In addition, these funds cover 20-30% financial needs of the business.