Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/82734
Authors: 
Bali Swain, Ranjula
Floro, Maria
Year of Publication: 
2007
Series/Report no.: 
Working Paper, Department of Economics, Uppsala University 2007:31
Abstract: 
Uncertainty and unpredictability faced by low-income households increase their vulnerability making poverty even more unbearable. India¡¦s National Bank for Agriculture and Rural Development (NABARD)-initiated Self-Help Group (SHG) program, which is currently the largest and fastest growing microfinance program in the developing world, has been aggressively promoted as a way of combating poverty. This paper investigates whether or not SHG participation results in reducing poverty and vulnerability. A theoretical framework is developed to examine the mechanisms through which the pecuniary and non-pecuniary effects of the SHG program on the beneficiaries¡¦ earnings and empowerment, influence their households¡¦ ability to manage risk. Going beyond the traditional poverty estimates, we use a vulnerability measure which quantifies the welfare loss associated with poverty as well as different types of risks like aggregate and idiosyncratic risks. Applying this measure to an Indian panel survey data for 2000 and 200ƒ£, we find that SHG members have lower vulnerability as compared to a group of non-SHG (control) members. Furthermore, we find that the poverty contributes to about 80 percent of the vulnerability faced by the household followed by aggregate risk.
Subjects: 
Microfinance
Vulnerability
Poverty
Risk Coping
JEL: 
D14
G21
I32
Document Type: 
Working Paper

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