Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/204380 
Year of Publication: 
2014
Series/Report no.: 
IFRO Working Paper No. 2014/12
Publisher: 
University of Copenhagen, Department of Food and Resource Economics (IFRO), Copenhagen
Abstract: 
In the absence of well-established factor markets, the role of indigenous institutions and social networks can be substantial for mobilizing factors for agricultural production. We investigate the role of an indigenous social network in Ethiopia, the iddir, in facilitating factor market transactions among smallholder farmers. Using detailed longitudinal household survey data and employing a difference-in-differences approach, we find that iddir membership improves households' access to factor markets. Specifically, we find that joining an iddir network improves households' access to land, labor and credit transactions between 7 and 11 percentage points. Furthermore, our findings also indicate that iddir networks crowd-out borrowing from local moneylenders (locally referred as Arata Abedari), a relatively expensive credit source, virtually without affecting borrowing from formal credit sources. These results point out the roles non-market arrangements, such as social networks, can play in mitigating market inefficiencies in poor rural markets.
Subjects: 
Social networks
iddir networks
factor market imperfections
factor market transactions
crowding-out
JEL: 
D02
D13
D71
D83
D85
J46
O17
Q12
Document Type: 
Working Paper

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