An Empirical Investigation of Risk Sharing among Indonesian Households
Parantap Basu and
Sigit Wibowo ()
No 2015_02, CEGAP Working Papers from Durham University Business School
This study investigates the formation of risk-sharing group in circumstances where households face barriers to insurance. We test alternative risk sharing models which include full risk sharing, borrowing-saving and private information about income and efforts. Using the Indonesia Family Life Survey (IFLS) dataset, this study provides evidence that the full risk-sharing hypothesis fails. There is some evidence that IFLS households smooth consumption using the credit market. No evidence is found in favor of risk sharing models with private information about effort and productivity. We then explore the possibility of Indonesian households forming stable informal risk sharing groups to mitigate idiosyncratic consumption risks. We find strong evidence of such endogenous group formation among IFLS households as a vehicle of informal risk sharing.
Keywords: credit access; risk sharing; endogenous group formation (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-dev, nep-sea and nep-sog
References: View references in EconPapers View complete reference list from CitEc
Citations Track citations by RSS feed
Downloads: (external link)
https://community.dur.ac.uk/parantap.basu/endo-final.pdf main text (application/pdf)
Working Paper: An Empirical Investigation of Risk Sharing among Indonesian Households (2017)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:dur:cegapw:2015_02
Access Statistics for this paper
More papers in CEGAP Working Papers from Durham University Business School Durham University Business School, Mill Hill Lane, Durham DH1 3LB, England. Contact information at EDIRC.
Series data maintained by Tatiana Damjanovic ().