Health shocks and consumption smoothing in rural households: Does microcredit have a role to play?

This paper estimates, using a large panel data set from rural Bangladesh, the effects of health shocks on household consumption and how access to microcredit affects households’ response to such shocks. Households appear to be fairly well insured against health shocks. Our results suggest that house...

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Bibliographic Details
Published in:Journal of development economics 2012-03, Vol.97 (2), p.232-243
Main Authors: Islam, Asadul, Maitra, Pushkar
Format: Article
Language:English
Subjects:
Access to credit
Access to health care
Bangladesh
Consumption
Development finance
Economic theory
Health care
Health shocks
Households
Insurance
Microcredit
Microfinance
Public health
Rural areas
Studies
Well-being
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Summary:This paper estimates, using a large panel data set from rural Bangladesh, the effects of health shocks on household consumption and how access to microcredit affects households’ response to such shocks. Households appear to be fairly well insured against health shocks. Our results suggest that households sell livestock in response to health shocks and short term insurance is therefore attained at a significant long term cost. However microcredit has a significant mitigating effect. Households that have access to microcredit do not need to sell livestock in order to insure consumption. Microcredit organizations and microcredit therefore have an insurance role to play, an aspect that has not been analyzed previously.
ISSN:0304-3878
1872-6089
DOI:10.1016/j.jdeveco.2011.05.003