Thursday, March 22, 2012

Managing Risk in Yogyakarta

We are pleased to release our newest working paper, on income smoothing practices in Yogyakarta, Indonesa, by Catur Sugiyanto, Sri Yani Kusumastuti, and Duddy Roesmara Donna. A brief summary from the authors:
Our research examines the various practices used to achieve income and consumption smoothing amongst the poorest households in Yogyakarta, Indonesia. It looks at selected 125 households, representing 25 households in each of the five regions of the Yogyakarta area. It designated how rural financial institution and other can help them to have better smoothing strategy. We found that the behaviour varies in response to the types of profession and gender. Furthermore, the source of the income fluctuation also matters in determining households’ responses. However, the source of the consumption fluctuation did not appear to differ across professions.

Older people concentrate their wealth in their house and land, i.e. in terms of physical static assets. By contrast, younger people are certainly more conscious of rates of return on different assets and have the physical capability to engage in other economic activities, hence their greater involvement with non-farm (and generally more active) enterprise activities. It is also interesting that younger people have higher saving and borrowing ratios than older people.

While households headed by men have a greater focus on livestock, female headed households tend to focus more on non-farm enterprises. This is not surprising, given the earnings patterns in rural areas; the larger share of loans in the portfolio of women may be associated with the fact that they are more involved in non-farm enterprise activities that are more likely to attract loans than men who deal predominately with farms and livestock.
Finally, the variation in asset choice as a function of education is quite interesting as pronounced differences emerge. The more educated tend to utilize formal savings mechanisms, such as money borrowed from friends, neighbours, traders, etc. By contrast, while avoided by those with no or high levels of education, those with some education tend to prefer livestock.

Click here to read the working paper.

Tuesday, March 6, 2012

Regulation as Retrospective Ethnography: Mobile Money and the Arts of Cash

Does the growing interest and investment in mobile money signal an end to the use of cash and coin? In a recent article, IMTFI Director Bill Maurer writes that predictions of cash's demise are a bit premature. By looking at how financial regulations deal with the way that people make payments and store money in their everyday lives, Maurer argues that we gain access to a “retrospective ethnography of potential” and see how people have come to integrate mobile money into their monetary practices alongside of cash.

To read the full article, click here.