Private Transfers, Informal Loans and Risk Sharing Among Poor Urban Households in Ethiopia

Eskander Alvi and Seife Dendir

Journal of Development Studies, 2009, vol. 45, issue 8, 1325-1343

Abstract: In this paper we examine how households in poor urban areas manage risks by use of transfers and loans. Compared to the sizeable literature dealing with the rural poor the literature on the urban poor is limited. This paper attempts to fill this gap by using household survey data from urban Ethiopia. We find that whereas both instruments - private transfers and informal loans - help households augment low and uncertain incomes, only transfers respond to observable signals of vulnerability, thus likely serving risk sharing purposes, while loans are largely dictated by household demand and resource proxies, therefore smoothing consumption though lacking the risk sharing property.

Date: 2009
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DOI: 10.1080/00220380902862929

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