Household Financial Access and Risk Sharing in Nigeria

By Stacy Carlson, Era Dabla-Norris, Mika Saito, Yu Shi

July 22, 2015

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Stacy Carlson, Era Dabla-Norris, Mika Saito, and Yu Shi. Household Financial Access and Risk Sharing in Nigeria, (USA: International Monetary Fund, 2015) accessed November 23, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

We examine the role of household financial access in determining the extent of risksharing 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.

Subject: Banking, Consumption, Financial inclusion, Financial markets, Household consumption, Income, Income shocks, National accounts

Keywords: Africa, Bank, Consumption, Consumption pattern, Enhancement schemes program, Financial access, Financial inclusion, Financial institution, Household consumption, Household Panel Data, Income, Income shocks, Legacy community bank, Micro-household business, Nigeria, Poverty rate, Risk-Sharing, Sub-Saharan Africa, WP

Publication Details

Pages:

28
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2015/169
Stock No:

WPIEA2015169
ISBN:

9781513506692
ISSN:

1018-5941

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