Fraying of the Ties that Bind: HIV/AIDS and Informal Contract Enforcement in KwaZulu Natal, South Africa
Year: 2009
Type: report
Study design: Observational Study
Abstract: This paper provides a theoretical and empirical investigation of the effects of HIV/AIDS on communitylevel\ninformal financial institutions such as rotating savings and credit associations. Our theoretical model\nillustrates that the mortality risk implied by the HIV/AIDS pandemic can put a significant strain on such\ninstitutions by shortening time horizons and weakening expectations of reciprocity on the part of\nparticipants. Mortality thus implies a community-wide externality, as even households that are not directly\nimpacted by the disease are nonetheless adversely affected by living in high prevalence communities.\nUsing panel data from the high-prevalence area of KwaZulu Natal, South Africa, we investigate the effects\nof community-level mortality on the rate of participation in community level financial and other types of\ngroups. We find that mortality at the community level substantially reduces the prevalence of group\nmembership, and that the differential impacts of mortality on different types of groups are consistent with\nthe predictions of our theoretical model.
Author: Benjamin Linkow
Language: English
Subfield: Economics and Econometrics
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W1926018252