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Short-term precaution, insurance and saving mechanisms in rural Vietnam

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  • Ha van Dung

    (University of Paderborn)

Abstract

This study investigates the impacts of short-term precautionary selection and insurance on household decisions regarding the participation in different kinds of saving mechanisms in rural Vietnam. The two-part model is employed for the analysis and unlike other studies I investigate household decisions regarding both, participation and contribution to formal and informal saving intermediaries. Furthermore we control for the endogeneity of the short-term precautionary motive and of insurance in the model of household contribution. The finding suggests that the short-term precautionary motive reduces the household probability to engage into formal and informal saving intermediaries. In addition, insurance is found to be a substitute for short-term precautionary savings. Concerning the contribution aspect, the short-term precautionary motive is found to reduce the participant’s deposits in formal saving intermediaries while there is no evidence for insurance in influencing household contribution to saving intermediaries.

Suggested Citation

  • Ha van Dung, 2014. "Short-term precaution, insurance and saving mechanisms in rural Vietnam," Working Papers CIE 82, Paderborn University, CIE Center for International Economics.
    • Handle: RePEc:pdn:ciepap:82
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    More about this item

    Keywords

    Short-term precautionary motive; insurance; saving intermediaries; cash hoarding; deposits;
    All these keywords.

    JEL classification:

    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements

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