Adverse Shocks and Social Protection in Africa: What Role for Formal and Informal Financial Institutions?

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dc.contributor.author ODURO, Abena D.
dc.date.accessioned 2010-05-05T09:55:57Z
dc.date.available 2010-05-05T09:55:57Z
dc.date.issued 2010
dc.identifier.issn 1028-3625
dc.identifier.uri http://hdl.handle.net/1814/13866
dc.description European Report on Development en
dc.description.abstract This paper presents evidence on the wide range of adverse shocks reported by African households. The current financial and economic crisis adds another layer of risk to al-ready vulnerable households and firms. In responding to an adverse shock, households are involved in a balancing act that is aimed at maintaining consumption and/or assets above critical levels. Households mainly use coping mechanisms that depend on family and other networks and self-insurance. There is limited recourse to public social protection and formal credit and insurance markets. The paper examines some informal financial arrangements. Some of these are not designed to smooth consumption when there is an adverse shock. These informal mechanisms have the potential to be the platform to expand access and utilisation of formal finance particularly in rural communities. There is a clear role for publicly provided interventions. This is because informal risk sharing mechanisms do not cover all shocks. The premium paid may not be adequate to cover the entire financial implications of the shock. Finally, the design of the risk-sharing institutions can result in the very poor being excluded. en
dc.language.iso en en
dc.relation.ispartofseries EUI RSCAS en
dc.relation.ispartofseries 2010/31 en
dc.relation.ispartofseries European Report on Development en
dc.subject shocks en
dc.subject coping strategies en
dc.subject financial institutions en
dc.title Adverse Shocks and Social Protection in Africa: What Role for Formal and Informal Financial Institutions? en
dc.type Working Paper en
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