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Risk-Sharing Networks in Rural Philippines

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  • Marcel Fafchamps
  • Susan Lund

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

Paper provided by University of Oxford, Department of Economics in its series Economics Series Working Papers with number 10.

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Date of creation: 01 Apr 2000
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Handle: RePEc:oxf:wpaper:10

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Keywords: risk sharing; informal credit; insurance; gifts; consumption smoothing;

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