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Does Microfinance Work as a Recovery Tool After Disasters? Evidence from the 2004 Tsunami

  • Becchetti, Leonardo
  • Castriota, Stefano

Summary We evaluate the effectiveness of microfinance as a recovery tool after tsunami by testing the impact of an equity injection from foreign donors which recapitalizes a Sri Lankan MFI and allows it to refinance borrowers seriously damaged by the calamity. We find that loans obtained from the MFI after the catastrophic event have a positive and significant effect on the change in real income and in weekly worked hours, and that the impact on performance variables is significantly stronger for damaged than non-damaged borrowers. Results hold after controlling for selection effects and for heterogeneity in both the timing of the intervention and the characteristics of treatment and control samples.

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Article provided by Elsevier in its journal World Development.

Volume (Year): 39 (2011)
Issue (Month): 6 (June)
Pages: 898-912

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Handle: RePEc:eee:wdevel:v:39:y:2011:i:6:p:898-912
Contact details of provider: Web page: http://www.elsevier.com/locate/worlddev

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  1. Shahidur R. Khandker, 2007. "Coping with flood: role of institutions in Bangladesh," Agricultural Economics, International Association of Agricultural Economists, vol. 36(2), pages 169-180, 03.
  2. Gubert, Flore & Fafchamps, Marcel, 2007. "The Formation of Risk Sharing Networks," Economics Papers from University Paris Dauphine 123456789/4392, Paris Dauphine University.
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  5. Prema-chandra Athukorala & Budy P. Resosudarmo, 2005. "The Indian Ocean Tsunami: Economic Impact, Disaster Management and Lessons," Departmental Working Papers 2005-05, The Australian National University, Arndt-Corden Department of Economics.
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  8. Hoque, Serajul, 2008. "Does Micro-credit Program in Bangladesh Increase Household’s Ability to Deal with Economic Hardships?," MPRA Paper 6678, University Library of Munich, Germany.
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