Formal RoSCAs in Argentina

What are the features of "formal" RoSCAs? What role can they play in development?
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Informal Rotating Savings and Credit Associations (RoSCAs) are often held up as models for NGOs interested in microfinance. Unlike informal RoSCAs, formal RoSCAs in Argentina do not use social capital to screen members and to enforce repayment. They rely instead on reduced transaction costs, regulation, the legal system, and individual risk evaluations. Net savers earn lower rates with formal RoSCAs than with bank accounts, but net borrowers pay lower rates. Formal RoSCAs increase access to small loans and savings services for the unbanked in Argentina, but NGOs probably cannot do much to promote them.

[Author's abstract]