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Risk-sharing networks in rural Philippines

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  • Fafchamps, Marcel
  • Lund, Susan

Abstract

Using detailed data on gifts, loans, and asset sales, this paper investigates how rural Filipino households deal with income and expenditure shocks. We find that shocks have a strong effect on gifts and informal loans, but little effect on sales of livestock and grain. Mutual insurance does not appear to take place at the village level; rather, households receive help primarily through networks of friends and relatives. Certain shocks are better insured than others. The evidence is consistent with models of quasi-credit where risk is shared within tightly knit networks through flexible, zero interest informal loans combined with pure transfers.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Development Economics.

Volume (Year): 71 (2003)
Issue (Month): 2 (August)
Pages: 261-287

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Handle: RePEc:eee:deveco:v:71:y:2003:i:2:p:261-287

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