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HEALTH SHOCKS AND CONSUMPTION SMOOTHING IN RURAL HOUSEHOLDS: DOES MICROCREDIT HAVE A ROLE TO PLAY?

Asadul Islam () and Pushkar Maitra ()

No 22/08, Monash Economics Working Papers from Monash University, Department of Economics

Abstract: This paper estimates, using a large panel data set from rural Bangladesh, the effects of health shocks on household consumption and how access to microcredit affects households' response to such shocks. Our results suggest that even though in general consumption remains stable in many cases when households are exposed to health shocks, households that have access to microcredit appear to cope (slightly) better. The most important instrument used by households appear be sales of productive assets (livestock) and there is a significant mitigating effect of microcredit: households that have access to microcredit do not need to sell livestock to the extent households that do not have access to microcredit need to, in order to insure consumption against health shocks. The results suggest that microcredit organizations and microcredit per se have an insurance role to play, an aspect that has not been analyzed previously.

Keywords: Health Shocks; Microcredit; Consumption Insurance; Bangladesh. (search for similar items in EconPapers)
JEL-codes: O12 I10 C23 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-dev, nep-hea, nep-ias and nep-mfd
Date: 2008-08-01
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Related works:
Journal Article: Health shocks and consumption smoothing in rural households: Does microcredit have a role to play? (2012) Downloads
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