Savings Groups, Shocks and Coping Strategies: The Case of Poor Rural Households in El Salvador.
Jahns, Elke.
2014
-
Abstract: There is still very little evidence to support the common claim that
savings groups help members cope with shocks, particularly in areas where traditional and
promoted savings groups are rare. This thesis examines the shocks faced by poor rural
households in El Salvador, the impacts of those shocks, the coping strategies used, and the
role of savings groups, using a combination of ... read morein-depth interviews and surveys. Econometric
analysis complements the qualitative research by estimating the impact of savings group
access on coping abilities and strategies. Nearly all respondents reported experiencing a
negative shock such as high food prices, illness, or bad harvest in the previous year.
Credit was the most common coping strategy for all shocks; more than half of respondents
borrowed, usually from friends and family. Twenty-five to 43% of respondents used personal
savings, mobilized labor or sold liquid assets. Findings confirm that the greater challenge
for many households is not net income over the course of the year; it is managing cash flow
so that shocks and short-term needs do not derail long-term well-being. For instance, most
households sell maize at low prices during the harvest season and/or buy it at high prices
during the hungry season, when they are most vulnerable to shocks. Participants reported
that savings groups help them manage and plan their household finances better, buy more or
better-quality food, build a cushion for emergencies, and enjoy greater peace of mind.
Participants also cited non-financial benefits, especially stronger friendships and greater
solidarity. The econometric analysis provides modest support for the idea that the presence
of savings groups increases coping ability by facilitating access to savings and social
support. However, many of the group's policy choices are not optimal for reducing
vulnerability. For example, most members receive their payouts around harvest time, rather
than during the hungry season or planting season when they are most likely to need food or
cash. Overall, though they show potential for improving a household's ability to cope with
shocks, savings groups could be more effective if policies were adjusted to better fit
members' goals and cash flow needs.
Thesis (Ph.D.)--Tufts University, 2014.
Submitted to the Dept. of Diplomacy, History, and Politics.
Advisor: Jenny Aker.
Committee: Julie Schaffner, and Kim Wilson.
Keywords: Economics, Latin American studies, and Social research.read less - ID:
- ng451v223
- Component ID:
- tufts:21692
- To Cite:
- TARC Citation Guide EndNote