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Health and Death Risk and Income Decisions: Evidence from Microfinance


  • Grant Jacobsen


This paper examines the relationship between health and death risk and income decisions in rural Pakistan. Using data from a microfinance institution, we analyse how insurance against hospitalisation and accidental death influences the purpose of microcredit loans. After correcting for the endogeneity of insurance uptake, we find that individuals are more likely to maintain the same loan purpose as their previous loan if they are insured. The result suggests that households that are insured against hospitalisation and accidental death pursue less diversified income portfolios. This movement away from diversification may increase expected profits.

Suggested Citation

  • Grant Jacobsen, 2009. "Health and Death Risk and Income Decisions: Evidence from Microfinance," Journal of Development Studies, Taylor & Francis Journals, vol. 45(6), pages 934-946.
  • Handle: RePEc:taf:jdevst:v:45:y:2009:i:6:p:934-946
    DOI: 10.1080/00220380902890250

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    References listed on IDEAS

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    Cited by:

    1. Emilios Galariotis & Christophe Villa & Nurmukhammad Yusupov, 2011. "Recent Advances in Lending to the Poor with Asymmetric Information," Journal of Development Studies, Taylor & Francis Journals, vol. 47(9), pages 1371-1390, July.
    2. Rashida Haq, 2012. "Shocks as a Source of Vulnerability: An Empirical Investigation from Pakistan," Poverty and Social Dynamics Paper Series 2012:06, Pakistan Institute of Development Economics.
    3. Rashida Haq, 2015. "Shocks as a Source of Vulnerability: An Empirical Investigation from Pakistan," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 54(3), pages 245-272.

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