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Risk Management for the Poor and Vulnerable

Author

Listed:
  • Ari A. Perdana

    (Centre for Strategic and International Studies)

Abstract

This paper reviews some literatures on the mechanisms available for the poor in managing risk. Lacking access to formal mechanisms of risk management, the poor rely on informal mechanisms, which are built based on the existing social networks and trust. But when the shocks are big or affecting the entire community, these informal mechanisms may not be adequate. Some policy interventions are then required to help improving the ability of poor people in managing risk. Policy intervention should aim to provide access for the poor on saving, credit and insurance. Microfinance schemes have been applauded as a successful best practice in providing access to saving and credit. However, microfinance institutions still have some room for improvement by expanding their role in providing insurance schemes.

Suggested Citation

  • Ari A. Perdana, 2005. "Risk Management for the Poor and Vulnerable," Microeconomics Working Papers 22005, East Asian Bureau of Economic Research.
  • Handle: RePEc:eab:microe:22005
    as

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    File URL: http://www.eaber.org/node/22005
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    References listed on IDEAS

    as
    1. Bloch, Francis & Genicot, Garance & Ray, Debraj, 2008. "Informal insurance in social networks," Journal of Economic Theory, Elsevier, vol. 143(1), pages 36-58, November.
    2. Coleman, Brett E., 1999. "The impact of group lending in Northeast Thailand," Journal of Development Economics, Elsevier, pages 105-141.
    3. Ann Huff Stevens, 1999. "Climbing out of Poverty, Falling Back in: Measuring the Persistence of Poverty Over Multiple Spells," Journal of Human Resources, University of Wisconsin Press, vol. 34(3), pages 557-588.
    4. Jalan, Jyotsna & Ravallion, Martin, 1999. "Are the poor less well insured? Evidence on vulnerability to income risk in rural China," Journal of Development Economics, Elsevier, pages 61-81.
    5. Fields, Gary S., 1994. "Data for measuring poverty and inequality changes in the developing countries," Journal of Development Economics, Elsevier, pages 87-102.
    6. Otsuka, Keijiro & Chuma, Hiroyuki & Hayami, Yujiro, 1992. "Land and Labor Contracts in Agrarian Economies: Theories and Facts," Journal of Economic Literature, American Economic Association, pages 1965-2018.
    7. Denis Drechsler & Johannes P. J├╝tting, 2005. "Private Health Insurance for the Poor in Developing Countries?," OECD Development Centre Policy Insights 11, OECD Publishing.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    poverty; vulnerability; risk management; microfinance;

    JEL classification:

    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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