Vulnerability to Shocks and Coping Strategies in Rural Bangladesh

This paper uses a novel conceptual framework and a large-scale household survey to study the phenomena of crisis and coping in rural Bangladesh. The empirical exercise is composed of two parts. The first part examines the prevalence of various kinds of shocks in rural Bangladesh and identified a number of important determinants of vulnerability to those shocks. The second part is concerned with the study of coping strategy – in particular, with identifying the major factors that enable households to avoid potentially injurious erosive coping strategies that deplete the assets base thereby jeopardising the household’s long-term viability even as they help to overcome a temporary crisis. The study found substantial variations in the exposure to shocks across regions, across occupational groups, across microcredit borrowers and non-borrowers and across participants and non-participants in the government’s social safety net programmes. The analysis of coping strategies reveals that a number of factors enable a household to better avoid the adoption of potentially injurious erosive strategies. These include access to microcredit, access to foreign remittance, and opportunities for engaging in non-farm activities. The policy implications are that in order to strengthen the rural household’s ability to avoid erosive coping strategies that might threaten their future livelihoods, the government ought to take actions to further enhance the access to credit, to strengthen the social safety net programmes so that they can make a more substantial contribution to the resources of the target groups at times of crises, to create greater opportunities for engaging in non-farm activities even in remote areas, and to address regional imbalances in both exposure to risks as well in the opportunities available to deal with the risks more effectively.