Social networks and factor markets: panel data evidence from Ethiopia

TY - JOUR

T1 - Social networks and factor markets

T2 - panel data evidence from Ethiopia

AU - Abay, Kibrom Araya

AU - Kahsay, Goytom Abraha

AU - Berhane, Guush

PY - 2018/1/2

Y1 - 2018/1/2

N2 - We investigate the role of an indigenous social network in Ethiopia, the iddir, in facilitating factor market transactions among smallholder farmers. We use detailed longitudinal household survey data and employ fixed effects estimation approaches to identify the effect of iddir membership on factor market transactions among farmers. We find that joining an iddir network improves households’ access to land, labour and credit transactions. Our findings also hint that iddir networks may crowd-out borrowing from local moneylenders (locally referred as ‘Arata Abedari’), a relatively expensive credit source. These results suggest that non-market institutions can play crucial roles in facilitating market transactions.

AB - We investigate the role of an indigenous social network in Ethiopia, the iddir, in facilitating factor market transactions among smallholder farmers. We use detailed longitudinal household survey data and employ fixed effects estimation approaches to identify the effect of iddir membership on factor market transactions among farmers. We find that joining an iddir network improves households’ access to land, labour and credit transactions. Our findings also hint that iddir networks may crowd-out borrowing from local moneylenders (locally referred as ‘Arata Abedari’), a relatively expensive credit source. These results suggest that non-market institutions can play crucial roles in facilitating market transactions.

KW - Faculty of Social Sciences

U2 - 10.1080/00220388.2017.1288224

DO - 10.1080/00220388.2017.1288224

M3 - Journal article

SN - 0022-0388

VL - 54

SP - 174

EP - 190

JO - Journal of Development Studies

JF - Journal of Development Studies

IS - 1

ER -