Health shocks and consumption, smoothing in rural households : does microcredit have a role to play? / Asadul Islam and Pushkar Maitra Islam, Asadul; Maitra, Pushkar

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Islam, Asadul ; Maitra, Pushkar
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The Journal of Development Economics
Medical care - Bangladesh - Economic aspects.; Consumption (Economics) -- Analysis; Livestock -- Analysis
To link to full-text access for this article, visit this link: Byline: Asadul Islam, Pushkar Maitra Keywords: Health shocks; Microcredit; Consumption; Insurance; Bangladesh Abstract: 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. Article History: Received 23 June 2009; Revised 16 June 2010; Accepted 16 May 2011 Article Note: (footnote) [star] We would like to thank the editor (Mark Rosenzweig), two anonymous referees, seminar participants at Monash University and the University of Newcastle and participants at the Econometric Society Australasian Meetings and at the NEUDC conference for their comments and suggestions. Pushkar Maitra would like to acknowledge funding provided by an Australian Research Council Discovery Grant. The usual caveat applies.
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