Informal Insurance Arrangements in Ethiopia: A Literature Review
Abstract
Various researches on informal financial sector presented its potential to achieve financial inclusion among low-income households. Apart from social networking, the informal financial sector will likely continue to be important in developing countries as well as among immigrants in developed countries in terms of financial access and support. Among the informal financial mechanisms, informal insurance arrangements are popular in developing countries whose beneficiaries include mainly low-income households. This article presents the general overview of informal insurance arrangements, mainly the Ethiopian iddir in Ethiopian communities and to explore whether these arrangements can complement with formal insurance services.
References
Achou, B. (2016). Disability in Retirement, Home Production, and Informal Insurance Between Spouses. Working Paper
Ambec, Stefan. (2008). Voting over Informal Risk-Sharing Rules. Journal of African Economies. 17. 635-659.
Ambrus, A., Chandrasekhar, A.G. & Elliott, M. (2014). Social Investments, Informal Risk Sharing, and Inequality. NBER Working Paper No. w20669. Available at SSRN: https://ssrn.com/abstract=2521427 (accessed 11th of August 2020)
Aredo, D. (2010). The Iddir: An Informal Insurance Arrangement in Ethiopia. Savings and Development, 34(1), 53-72. Retrieved November 6, 2020, from http://www.jstor.org/stable/41406511
Barbet, V., Bourlès, R. & Rouchier, J., (2020). Informal risk-sharing cooperatives: the effect of learning and other-regarding preferences. J Evol Econ 30, 451–478.
Bazezew, A., & Chanie, W. (2015). Iddirs as Community-based Social Capital in the Amhara Region of Ethiopia: Case Study in Gende Woin Town of East Gojjam. The Ethiopian Journal of Social Sciences Volume 1, Number 1
Belissa, T., Bulte, E., Cecchi, F., Gangopadhyay, S. & Robert, L. (2019). Liquidity Constraints, Informal Institutions, and the Adoption of Weather Insurance: A Randomized Controlled Trial in Ethiopia. Journal of Development Economics. 140, 269-278
Beyene, F. (2014). Herd mobility, Markets and Informal Insurance Practices among Herders in Ethiopia. Journal of Development and Agricultural Economics, 6(3), 105-115.
Bloch, F., Garance, G. & Ray, D. (2008). Informal Insurance in Social Networks. Journal of Economic Theory, 143, (1), 36-58
Boucher, S. & Delpierre, M. (2014). The Impact of Index-Based Insurance on Informal Risk-Sharing Arrangement. Luxembourg Institute of Socio-Economic Research (LISER) Working Paper Series 2014-13
Browne, E. (2013). Community-based Social Protection. GSDRC Helpdesk Research Report
Bulcha, M. (1973). Eder: Its Roles in Development and Social Change in Addis Ababa. Senior essay, Addis Ababa University.
Calder, R. & Tanhchareun, T. (2014). Informal social protection: Social relations and cash transfers. Australian Government Department of Foreign Affairs and Trade, Research Report
Carter, M. C. & Barrett C.B. (2006). The Economics of Poverty Traps and Persistent Poverty: An Asset-based Approach. Journal of Development Studies, vol. 42, n.2, pp. 178-199.
Castellani, D. (2014). Shocks and Credit Choice in Southern Ethiopia. Agricultural Finance Review, Vol. 74 No. 1, pp. 87-114.
Choudhury, S. R., & Bagchi, D. (2016). Financial Exclusion-A Paradox in Developing Countries. Journal of Economics and Finance, 3(1), 40–45.
Coate, S. & Ravallion, M. (1993). Reciprocity without commitment: Characterization and performance of informal insurance arrangements. Journal of Development Economics, 40, (1), 1-24
Coheur, A., Jacquier, C., Schmitt-Diabaté, V. & Schremmer, J. (2008). Linkages between Statutory Social Security Schemes and Community-Based Social Protection: A Promising New Approach. International Social Security Association: Geneva.
Creese A. & Bennett S. (1997). Rural Risk-sharing Strategies. In Innovations in Health Care Financing: Proceedings of a World Bank Conference, Schieber GJ (ed.). World Bank: Washington, DC; 163–182.
Dafuleya, G. (2012). Enterprising in The Face Of Death: Social Entrepreneurship In African Burial Societies. Journal of Enterprising Culture (JEC), World Scientific Publishing Co. Pte. Ltd., vol. 20(03), pages 357-378.
Dejene Aredo (1999). The Village Economy and Indigenous Financial Institutions: Theory and Evidence from Rural Ethiopia", in Mulat Demeke and Wolday Amha (Eds.), Economics of Integrated Crop and Livestock Systems in Ethiopia; Agricultural Economics Society of Ethiopia: Addis Ababa.
Dejene Aredo. (2003). Iddir: A Look at a Form of Social Capital. In Alula Pankhurst (Eds.), Iddirs: Participation and Development. ACORD: Addis Ababa.
Dejene Aredo (1993). The Informal and Semi-formal Financial Sectors in Ethiopia: A Study of the Iqqub, Iddir, and Savings and Credit Co-operatives. AERC Research Papers, No. 21: African Economic.
Dercon, S., De Weerdt, J., Bold, T. & Pankhurst, A. (2006). Group-based Funeral Insurance in Ethiopia and Tanzania. World Development, Elsevier, vol. 34(4), pages 685-703.
Dercon, S., Hill, R., Clarke, D., Outes-Leon, I. & Taffesse, A. (2014). Offering Rainfall Insurance to Informal Insurance Groups: Evidence from a Field Experiment in Ethiopia. Journal of Development Economics. 106. 132-143.
Fafchamps, M. & Lund, S. (2003). Risk-sharing Networks in Rural Philippines. Journal of Development Economics, Elsevier, vol. 71(2), pages 261-287.
Fitzsimons E., Malde, B. & Vera‐Hernández, M. (2018). Group Size and the Efficiency of Informal Risk Sharing. Economic Journal, Royal Economic Society, vol. 128(612), pages 575-608
Gedamu, F. (1974). Urbanisation, Polyethnic Group Voluntary Associations, and National Integration in Ethiopia. Ethiopian Journal of Development Research 1, no. 1: 71–80.
Habtom G.K. & Ruys P. (2007). Traditional Risk-sharing Arrangements and Informal Social Insurance in Eritrea; Health Policy. (80(1):218-235.
Jain, Prachi (2016). Imperfect Monitoring and Informal Risk Sharing: The Role of Social Ties. Working paper.
Kaseke, E. (2013). Informal Social Security In Southern Africa. SASPEN and FES International Conference on Social Protection, Johannesburg, 16-17
Korten, D. C. (1972). Planned Change in a Traditional Society: Psychological Problems of Modernization in Ethiopia. New York: Praeger.
LeMay-Boucher, P. (2009). Beninese and Ethiopian Informal Insurance Groups: A Comparative Analysis. Development Policy Review. 27. 333-347.
Mazzucato, V. (2009). Informal Insurance Arrangements in Ghanaian Migrants' Transnational Networks: The Role of Reverse Remittances and Geographic Proximity. World Development, Elsevier, vol. 37(6), pages 1105-1115,
Motameni, M. (2016). A Novel Analysis of Risk Sharing Effects on Income Inequality in Informal Insurances. Econ. Rev. Vol. 21, No. 2, pp. 230-240
Ottaway, M. (1976). Urbanization in Ethiopia: A Text with Integrated Readings, Department of Sociology and Anthropology, A.A.U. Sociology and Anthropology, A.A.U.
Pankhurst, A. & Mariam, D. (2000). The "Iddir" in Ethiopia: Historical Development, Social Function, and Potential Role in HIV/AIDS Prevention and Control. Northeast African Studies, 7(2), new series, 35-57.
Pankhurst, R. & Andreas Eshete (1958). Self-Help in Ethiopia. Ethiopia Observer 2, no. 11: 354–64.
Pankhurst, A. (1998). The Role of Indigenous Associations in Development, Their Past Involvement, and Potentials: A Comparison of Burial, Credit, Migrant, and Religious-Social Associations. Paper presented at the Workshop on the Role of Indigenous Associations and Institutions in Development. Ethiopian Society of Sociologists, Social Workers, and Anthropologists, Addis Ababa.
Pankhurst, A. (2003). The Role and Space for Iddirs to Participate in the Development of Ethiopia. In Iddirs: Participation and Development. Proceedings of the Ethiopian National Conference 20–21 December 2001, edited by A. Pankhurst. Addis Ababa: Agency for Cooperation in Research and Development (ACORD). 2–42.
Robinson, J. (2012). Limited Insurance within the Household: Evidence from a Field Experiment in Kenya. American Economic Journal: Applied Economics, 4(4), 140-164.
Ruparanganda, L., & Ruparanganda, B., & Mabvurira, M. (2018). The place of 'traditional' social security in modern era: Lessons from Buhera District. African Journal of Social Work. 8. 39-46.
Santos, P. & Barrett, C. (2006). Informal Insurance in the Presence of Poverty Traps: Evidence from Southern Ethiopia. 2006 Annual Meeting, August 12-18, 2006, Queensland, Australia 25487, International Association of Agricultural Economists.
Seifu, A. (1969). Iddir in Addis Ababa: a Sociological Study. Ethiopia Observer 12, no. 1: 8–33.
Takahashi, K., Barrett, B. & Ikegami, M. (2018). Does Index Insurance Crowd in or Crowd Out Informal Risk Sharing? Evidence from Rural Ethiopia. American Journal of Agricultural Economics, Volume 101, Issue 3, Pages 672–691
Tenagashaw, M. (1973). A Study of the Changing Role of Entoto Woreda Eddir Associations. Senior essay, Addis Ababa University.
Teshome, E., Zenebe, M., Metaferia, H. & Biadgilign, S. (2014). Participation and significance of self-help groups for social development: Exploring the community capacity in Ethiopia. Retrieved from SpringerPlus. 3. 189. 10.1186/2193-1801-3-189.
Townsend, R. (1994). Risk and Insurance in Village India. Econometrica, 62, (3), 539-591
Trærup, S. (2012). Informal Networks and Resilience to Climate Change Impacts: A Collective Approach to Index Insurance, Global Environmental Change 22, 255–267
Verpoorten, R., Verschraegen, G. (2010). Formal and informal social protection in sub-Saharan Africa: a complex welfare mix to reduce poverty and inequality. In: Suter, C. (Ed.), Inequality beyond Globalization: Economic Changes, Social Transformations, and the Dynamics of Inequality. Lit Verlag, Berlin, pp. 311–334.
Wossen, T., Di Falco, S., Berger, T. & Mcclain, W. (2016). You are not alone: social capital and risk exposure in rural Ethiopia. Food Security. 10.1007/s12571-016-0587-5.
Xu, C., & Miranda, M. (2019). Covariate Risk, Index Insurance, and the Sustainability of Informal Risk Sharing Arrangements.
Ambec, Stefan. (2008). Voting over Informal Risk-Sharing Rules. Journal of African Economies. 17. 635-659.
Ambrus, A., Chandrasekhar, A.G. & Elliott, M. (2014). Social Investments, Informal Risk Sharing, and Inequality. NBER Working Paper No. w20669. Available at SSRN: https://ssrn.com/abstract=2521427 (accessed 11th of August 2020)
Aredo, D. (2010). The Iddir: An Informal Insurance Arrangement in Ethiopia. Savings and Development, 34(1), 53-72. Retrieved November 6, 2020, from http://www.jstor.org/stable/41406511
Barbet, V., Bourlès, R. & Rouchier, J., (2020). Informal risk-sharing cooperatives: the effect of learning and other-regarding preferences. J Evol Econ 30, 451–478.
Bazezew, A., & Chanie, W. (2015). Iddirs as Community-based Social Capital in the Amhara Region of Ethiopia: Case Study in Gende Woin Town of East Gojjam. The Ethiopian Journal of Social Sciences Volume 1, Number 1
Belissa, T., Bulte, E., Cecchi, F., Gangopadhyay, S. & Robert, L. (2019). Liquidity Constraints, Informal Institutions, and the Adoption of Weather Insurance: A Randomized Controlled Trial in Ethiopia. Journal of Development Economics. 140, 269-278
Beyene, F. (2014). Herd mobility, Markets and Informal Insurance Practices among Herders in Ethiopia. Journal of Development and Agricultural Economics, 6(3), 105-115.
Bloch, F., Garance, G. & Ray, D. (2008). Informal Insurance in Social Networks. Journal of Economic Theory, 143, (1), 36-58
Boucher, S. & Delpierre, M. (2014). The Impact of Index-Based Insurance on Informal Risk-Sharing Arrangement. Luxembourg Institute of Socio-Economic Research (LISER) Working Paper Series 2014-13
Browne, E. (2013). Community-based Social Protection. GSDRC Helpdesk Research Report
Bulcha, M. (1973). Eder: Its Roles in Development and Social Change in Addis Ababa. Senior essay, Addis Ababa University.
Calder, R. & Tanhchareun, T. (2014). Informal social protection: Social relations and cash transfers. Australian Government Department of Foreign Affairs and Trade, Research Report
Carter, M. C. & Barrett C.B. (2006). The Economics of Poverty Traps and Persistent Poverty: An Asset-based Approach. Journal of Development Studies, vol. 42, n.2, pp. 178-199.
Castellani, D. (2014). Shocks and Credit Choice in Southern Ethiopia. Agricultural Finance Review, Vol. 74 No. 1, pp. 87-114.
Choudhury, S. R., & Bagchi, D. (2016). Financial Exclusion-A Paradox in Developing Countries. Journal of Economics and Finance, 3(1), 40–45.
Coate, S. & Ravallion, M. (1993). Reciprocity without commitment: Characterization and performance of informal insurance arrangements. Journal of Development Economics, 40, (1), 1-24
Coheur, A., Jacquier, C., Schmitt-Diabaté, V. & Schremmer, J. (2008). Linkages between Statutory Social Security Schemes and Community-Based Social Protection: A Promising New Approach. International Social Security Association: Geneva.
Creese A. & Bennett S. (1997). Rural Risk-sharing Strategies. In Innovations in Health Care Financing: Proceedings of a World Bank Conference, Schieber GJ (ed.). World Bank: Washington, DC; 163–182.
Dafuleya, G. (2012). Enterprising in The Face Of Death: Social Entrepreneurship In African Burial Societies. Journal of Enterprising Culture (JEC), World Scientific Publishing Co. Pte. Ltd., vol. 20(03), pages 357-378.
Dejene Aredo (1999). The Village Economy and Indigenous Financial Institutions: Theory and Evidence from Rural Ethiopia", in Mulat Demeke and Wolday Amha (Eds.), Economics of Integrated Crop and Livestock Systems in Ethiopia; Agricultural Economics Society of Ethiopia: Addis Ababa.
Dejene Aredo. (2003). Iddir: A Look at a Form of Social Capital. In Alula Pankhurst (Eds.), Iddirs: Participation and Development. ACORD: Addis Ababa.
Dejene Aredo (1993). The Informal and Semi-formal Financial Sectors in Ethiopia: A Study of the Iqqub, Iddir, and Savings and Credit Co-operatives. AERC Research Papers, No. 21: African Economic.
Dercon, S., De Weerdt, J., Bold, T. & Pankhurst, A. (2006). Group-based Funeral Insurance in Ethiopia and Tanzania. World Development, Elsevier, vol. 34(4), pages 685-703.
Dercon, S., Hill, R., Clarke, D., Outes-Leon, I. & Taffesse, A. (2014). Offering Rainfall Insurance to Informal Insurance Groups: Evidence from a Field Experiment in Ethiopia. Journal of Development Economics. 106. 132-143.
Fafchamps, M. & Lund, S. (2003). Risk-sharing Networks in Rural Philippines. Journal of Development Economics, Elsevier, vol. 71(2), pages 261-287.
Fitzsimons E., Malde, B. & Vera‐Hernández, M. (2018). Group Size and the Efficiency of Informal Risk Sharing. Economic Journal, Royal Economic Society, vol. 128(612), pages 575-608
Gedamu, F. (1974). Urbanisation, Polyethnic Group Voluntary Associations, and National Integration in Ethiopia. Ethiopian Journal of Development Research 1, no. 1: 71–80.
Habtom G.K. & Ruys P. (2007). Traditional Risk-sharing Arrangements and Informal Social Insurance in Eritrea; Health Policy. (80(1):218-235.
Jain, Prachi (2016). Imperfect Monitoring and Informal Risk Sharing: The Role of Social Ties. Working paper.
Kaseke, E. (2013). Informal Social Security In Southern Africa. SASPEN and FES International Conference on Social Protection, Johannesburg, 16-17
Korten, D. C. (1972). Planned Change in a Traditional Society: Psychological Problems of Modernization in Ethiopia. New York: Praeger.
LeMay-Boucher, P. (2009). Beninese and Ethiopian Informal Insurance Groups: A Comparative Analysis. Development Policy Review. 27. 333-347.
Mazzucato, V. (2009). Informal Insurance Arrangements in Ghanaian Migrants' Transnational Networks: The Role of Reverse Remittances and Geographic Proximity. World Development, Elsevier, vol. 37(6), pages 1105-1115,
Motameni, M. (2016). A Novel Analysis of Risk Sharing Effects on Income Inequality in Informal Insurances. Econ. Rev. Vol. 21, No. 2, pp. 230-240
Ottaway, M. (1976). Urbanization in Ethiopia: A Text with Integrated Readings, Department of Sociology and Anthropology, A.A.U. Sociology and Anthropology, A.A.U.
Pankhurst, A. & Mariam, D. (2000). The "Iddir" in Ethiopia: Historical Development, Social Function, and Potential Role in HIV/AIDS Prevention and Control. Northeast African Studies, 7(2), new series, 35-57.
Pankhurst, R. & Andreas Eshete (1958). Self-Help in Ethiopia. Ethiopia Observer 2, no. 11: 354–64.
Pankhurst, A. (1998). The Role of Indigenous Associations in Development, Their Past Involvement, and Potentials: A Comparison of Burial, Credit, Migrant, and Religious-Social Associations. Paper presented at the Workshop on the Role of Indigenous Associations and Institutions in Development. Ethiopian Society of Sociologists, Social Workers, and Anthropologists, Addis Ababa.
Pankhurst, A. (2003). The Role and Space for Iddirs to Participate in the Development of Ethiopia. In Iddirs: Participation and Development. Proceedings of the Ethiopian National Conference 20–21 December 2001, edited by A. Pankhurst. Addis Ababa: Agency for Cooperation in Research and Development (ACORD). 2–42.
Robinson, J. (2012). Limited Insurance within the Household: Evidence from a Field Experiment in Kenya. American Economic Journal: Applied Economics, 4(4), 140-164.
Ruparanganda, L., & Ruparanganda, B., & Mabvurira, M. (2018). The place of 'traditional' social security in modern era: Lessons from Buhera District. African Journal of Social Work. 8. 39-46.
Santos, P. & Barrett, C. (2006). Informal Insurance in the Presence of Poverty Traps: Evidence from Southern Ethiopia. 2006 Annual Meeting, August 12-18, 2006, Queensland, Australia 25487, International Association of Agricultural Economists.
Seifu, A. (1969). Iddir in Addis Ababa: a Sociological Study. Ethiopia Observer 12, no. 1: 8–33.
Takahashi, K., Barrett, B. & Ikegami, M. (2018). Does Index Insurance Crowd in or Crowd Out Informal Risk Sharing? Evidence from Rural Ethiopia. American Journal of Agricultural Economics, Volume 101, Issue 3, Pages 672–691
Tenagashaw, M. (1973). A Study of the Changing Role of Entoto Woreda Eddir Associations. Senior essay, Addis Ababa University.
Teshome, E., Zenebe, M., Metaferia, H. & Biadgilign, S. (2014). Participation and significance of self-help groups for social development: Exploring the community capacity in Ethiopia. Retrieved from SpringerPlus. 3. 189. 10.1186/2193-1801-3-189.
Townsend, R. (1994). Risk and Insurance in Village India. Econometrica, 62, (3), 539-591
Trærup, S. (2012). Informal Networks and Resilience to Climate Change Impacts: A Collective Approach to Index Insurance, Global Environmental Change 22, 255–267
Verpoorten, R., Verschraegen, G. (2010). Formal and informal social protection in sub-Saharan Africa: a complex welfare mix to reduce poverty and inequality. In: Suter, C. (Ed.), Inequality beyond Globalization: Economic Changes, Social Transformations, and the Dynamics of Inequality. Lit Verlag, Berlin, pp. 311–334.
Wossen, T., Di Falco, S., Berger, T. & Mcclain, W. (2016). You are not alone: social capital and risk exposure in rural Ethiopia. Food Security. 10.1007/s12571-016-0587-5.
Xu, C., & Miranda, M. (2019). Covariate Risk, Index Insurance, and the Sustainability of Informal Risk Sharing Arrangements.
Published
2021-11-01
How to Cite
A. BESHIR, Howlet; M. ALHABSHI, Syed; ZAKARIYAH, Habeebullah.
Informal Insurance Arrangements in Ethiopia: A Literature Review.
Asian Journal of Research in Business and Management, [S.l.], v. 3, n. 3, p. 210-209, nov. 2021.
Available at: <https://myjms.mohe.gov.my/index.php/ajrbm/article/view/16065>. Date accessed: 18 jan. 2025.
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Articles
