Risk-sharing networks among households in rural Ethiopia

Daniel Ayalew
Authors registered in the RePEc Author Service: Daniel Ayalew Ali

No 2003-04, CSAE Working Paper Series from Centre for the Study of African Economies, University of Oxford

Abstract: We apply the set up of limited commitment model to empirically test the role of informal risk-sharing networks using panel data on informal credit transactions from rural Ethiopia. The empirical estimates provide convincing evidence for the belief that enforcement problem limits the direct role of credit transactions in risk-sharing arrangements between rural households, whether the villages are ethnically homogenous or not. We also find that households with more land have better access to the informal credit market and access is significantly improved through their participation in small group networks, But the informal credit market and the networks under consideration serve little purpose to the land poor households. These results, therefore, imply that full risk-sharing does not appear to materialize at the village level.

Keywords: Risk-sharing; Limited commitment; Informal credit; Consumption smoothing (search for similar items in EconPapers)
JEL-codes: D91 O12 Q12 (search for similar items in EconPapers)
Date: 2003
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Citations: View citations in EconPapers (1)

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Related works:
Working Paper: Risk-Sharing Networks among Households in Rural Ethiopia (2004)
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