Household Financial Access and Risk Sharing in Nigeria

29 Pages Posted: 14 Sep 2015

See all articles by Stacy Carlson

Stacy Carlson

Massachusetts Institute of Technology (MIT)

Era Dabla-Norris

International Monetary Fund (IMF)

Mika Saito

International Monetary Fund (IMF)

Yu Shi

Massachusetts Institute of Technology (MIT)

Date Written: July 2015

Abstract

We examine the role of household financial access in determining the extent of risk sharing in Nigeria using household-level panel data. We estimate changes in the response of consumption to shocks for households with formal and informal access to finance and those without, both for the country as a whole and for different regions. Our findings suggest that households with financial access who experience an unexpected negative income shock see consumption fall by 15 percentage points less than those without access. This result is mainly driven by households with informal financial access, and by household savings rather than borrowing. Regional variation in risk sharing tends to be significant, suggesting that financial inclusion efforts going forward should have a more regional focus.

Keywords: Financial access, Risk-Sharing, Household Panel Data, household, savings, households, credit,

JEL Classification: O16, O17, O55

Suggested Citation

Carlson, Stacy and Dabla-Norris, Era and Saito, Mika and Shi, Yu, Household Financial Access and Risk Sharing in Nigeria (July 2015). IMF Working Paper No. 15/169. Available at SSRN: https://ssrn.com/abstract=2659527

Stacy Carlson (Contact Author)

Massachusetts Institute of Technology (MIT) ( email )

77 Massachusetts Avenue
50 Memorial Drive
Cambridge, MA 02139-4307
United States

Era Dabla-Norris

International Monetary Fund (IMF) ( email )

700 19th Street NW
Washington, DC 20431
United States

Mika Saito

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

Yu Shi

Massachusetts Institute of Technology (MIT) ( email )

77 Massachusetts Avenue
50 Memorial Drive
Cambridge, MA 02139-4307
United States

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