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Accepted Paper:
Paper short abstract:
The study investigates the role of formal and informal credit interventions during the crisis. Analyzing income and food vulnerabilities of households during Covid-19, it highlights the role of informal saving mechanisms in reducing vulnerabilities in a sustainable way during the crisis times.
Paper long abstract:
Crises do hit hard on the marginalized households exacerbating their vulnerabilities. The usual credit interventions come from state through transfers and grants and also in the form of micro-credit from formal institutions. In addition, access to informal saving mechanism of Rotating Saving & Credit Associations (ROSCAs) also plays an important role in mitigating the negative consequences of crisis. In this backdrop, this study investigates the efficacy of the afore-mentioned credit interventions in reducing income and food vulnerabilities of households during the crisis times. We exploit a primary household survey data collected in the summer of 2021 when the pandemic was at its peak. The sample consists of 508 households residing in five towns in a semi-urban area of Lahore City of Punjab Province.
Our findings show that informal access to credit through ROSCAs had the maximum impact in reducing income and food vulnerabilities of households followed by the state-led transfer and grants. Whereas microfinance interventions were the least effective in mitigating the negative consequences during the crisis. It may suggest that ROSCA participants were more resilient in withstanding idiosyncratic shocks thus better and hence they managed to smoothen their consumption levels thus ensuring their income and food security. In other words, the unconditional credit interventions may be more effective than conditional cash transfers schemes in crisis times. Therefore, this study calls for hybrid credit interventions having a feature of both conditional and unconditional cash transfers to better cater to the marginalized communities’ wellbeing during the crisis times in sustainable way.
Poverty dynamics amidst recurrent crises: Reflections, responses and revivals [Poverty Dynamics and Multidimensional Poverty SG]
Session 1 Wednesday 25 June, 2025, -