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Health shocks and consumption smoothing in rural households: Does microcredit have a role to play?

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  • Islam, Asadul
  • Maitra, Pushkar

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. Households appear to be fairly well insured against health shocks. Our results suggest that households sell livestock in response to health shocks and short term insurance is therefore attained at a significant long term cost. However microcredit has a significant mitigating effect. Households that have access to microcredit do not need to sell livestock in order to insure consumption. Microcredit organizations and microcredit therefore have an insurance role to play, an aspect that has not been analyzed previously.

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Bibliographic Info

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

Volume (Year): 97 (2012)
Issue (Month): 2 ()
Pages: 232-243

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Handle: RePEc:eee:deveco:v:97:y:2012:i:2:p:232-243

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Web page: http://www.elsevier.com/locate/devec

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Keywords: Health shocks; Microcredit; Consumption; Insurance; Bangladesh;

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Citations

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Cited by:
  1. Robert Sparrow & Ellen Van de Poel & Gracia Hadiwidjaja & Athia Yumna & Nila Warda & Asep Suryahadi, 2012. "Financial Consequences of Ill Health and Informal Coping Mechanisms in Indonesia," Departmental Working Papers 2012-07, The Australian National University, Arndt-Corden Department of Economics.
  2. repec:dgr:uvatin:2012078 is not listed on IDEAS
  3. Ambrosius, Christian & Cuecuecha, Alfredo, 2013. "Are Remittances a Substitute for Credit? Carrying the Financial Burden of Health Shocks in National and Transnational Households," World Development, Elsevier, vol. 46(C), pages 143-152.
  4. Gabriela Flores & Owen O'Donnell, 2012. "Catastrophic Medical Expenditure Risk," Tinbergen Institute Discussion Papers 12-078/3, Tinbergen Institute.
  5. Khan, F.U. & Arjun S. Bedi & Sparrow, R.A., 2014. "Sickness and death: economic consequences and coping strategies of the urban poor in Bangladesh," ISS Working Papers - General Series 587, International Institute of Social Studies of Erasmus University Rotterdam (ISS), The Hague.
  6. Jing You & Samuel Annim, 2013. "The impact of microcredit on child education: quasi-experimental evidence from rural China," Brooks World Poverty Institute Working Paper Series 18313, BWPI, The University of Manchester.
  7. You, Jing, 2013. "The role of microcredit in older children’s nutrition: Quasi-experimental evidence from rural China," Food Policy, Elsevier, vol. 43(C), pages 167-179.
  8. S. R. Osmani & Meherun Ahmed, 2013. "Vulnerability to Shocks and Coping Strategies in Rural Bangladesh," Working Papers 21, Institute of Microfinance (InM).

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