The formation of risk sharing networks
Abstract(English) This paper examines the endogenous formation of risk sharing networks in the rural Philippines. We show that geographic proximity is a major determinant of interpersonal relationships. We find little evidence that people form relationships to pool income risk. The existence of a pre-existing relationship between two individuals is a major determinant of subsequent gifts and informal loans between them, controlling for other proximity factors. From this we conclude that these transfers and informal loans are embedded in interpersonal relationships. These relationships are largely determined by proximity factors and are only weakly the result of purposeful diversification of income risk. There is, however, some evidence that the formation of risk sharing links is aimed at pooling health risk. The paper also makes a methodological contribution to the estimation of dyadic models. _________________________________ (franÃ§ais) Cet article examine la faÃ§on dont se forment les rÃ©seaux informels de partage des risques Ã partir de donnÃ©es collectÃ©es aux Philippines. Nous trouvons que les mÃ©nages enquÃªtÃ©s choisissent des partenaires potentiels d'entraide gÃ©ographiquement proches d'eux mais non Ã©conomiquement distants d'eux. Nous trouvons Ã©galement que l'existence d'un lien ex ante est un dÃ©terminant important des dons et prÃªts informels observÃ©s entre mÃ©nages. Nous concluons de ces rÃ©sultats empiriques que les transactions observÃ©es entre mÃ©nages s'inscrivent dans le cadre de relations de voisinage dont l'objectif premier n'est pas la diversification des risques de revenu. En revanche, un partage des risques liÃ©s Ã la santÃ© semble Ãªtre Ã l'oeuvre. L'article fait une contribution mÃ©thodologique Ã travers l'estimation de modÃ¨les dyadiques.
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Bibliographic InfoArticle provided by Elsevier in its journal Journal of Development Economics.
Volume (Year): 83 (2007)
Issue (Month): 2 (July)
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Web page: http://www.elsevier.com/locate/devec
Other versions of this item:
- Marcel Fafchamps & Flore Gubert, 2005. "The Formation of Risk Sharing Networks," Working Papers DT/2005/13, DIAL (Développement, Institutions et Mondialisation).
- Marcel Fafchamps & Flore Gubert, 2005. "The Formation of Risk Sharing Networks," Economics Series Working Papers GPRG-WPS-037, University of Oxford, Department of Economics.
- D85 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Network Formation
- O12 - Economic Development, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
- C49 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Other
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