Working Paper: NBER ID: w31245
Authors: Orazio Attanasio; Anjini Kochar; Aprajit Mahajan; Vaishnavi Surendra
Abstract: Evaluations of group savings and lending programs have largely focused on average impacts, rather than distributional impacts — finding modest effects on long-term economic well-being. In this paper, we exploit the randomized roll-out of a self-help group lending program in rural Bihar, India (Hoffmann et al., 2021) to demonstrate that well-functioning groups facilitate risk-sharing within rural communities. We find no impact of the program on risk-sharing, measured as a reduction in the variance of consumption growth, in the aggregate. However, the program significantly improves risk-sharing in regions where it had greater institutional capacity and was better implemented. Building on our theoretical framework, we provide evidence of a specific channel of impact: program quality and pre-existing scale improve the quality and functioning of groups, which in turn increase the insurance value of the program to communities.
Keywords: Risk Sharing; Self-Help Groups; Microfinance; Economic Well-Being
JEL Codes: D14; G21; I38; O13; O16
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| SHG membership (C71) | risk sharing (D16) |
| program quality (C87) | risk sharing (D16) |
| program quality (C87) | insurance value of the program (G52) |
| well-functioning groups (D71) | risk sharing (D16) |
| SHG program implementation (C87) | risk sharing (D16) |