The Effects Of Social Capital On Informal Insurance Risk Sharing Of Rural Households

The formers’ poverty has been a big concern in China.The majority of them live in the 14 undeveloped poverty stricken areas,which have been considered as crucial battlefields for future poverty alleviation.These areas face harsh living conditions and frequent natural disasters,and the formers encounter various risk shocks.Both formal and informal insurance are applied there for the farmers’ risk managment.At present,there exist two forms of social insurance:the new rural cooperative medical system and the rural social endowment insurance.The development of commercial insurance has been very slow.Therefore,the informal insurance based on social capital is a major means for the farmers’ risk sharing.Firstly,the theory of social capital and informal insurance related concepts are described in this paper,which mainly defines the meaning of the essence of insurance,the connotation and patterns of informal insurance,and in the perspective of social capital,theoretically analyzes the risk sharing mechanism of informal insurance.Secondly,through the field survey in such areas in China,the 11 provinces 20 cities in the undeveloped poverty stricken areas of 1176 rural households survey data for statistical description,to understand the status of the samples at this stage the former’s social capital and informal insurance conditions.And on this basis,it uses the Tobit model and factor analysis method to carry on the enpirical analysis.It discusses the effects of four dimensions of social capital,such as social network,particpation,trust and recprocity on the risk sharing amount of informal insurance.The enpirical results show that those farmers who have rich social capital also have greater informal insurance risk sharing limit,as well as social network,participation,reciprocity,trust four different social capital dimensions.The influence of trust,reciprocity,social network and participation on the informal insurance risk sharing quota is different,and the degree from high to low is trust,reciprocity,social network scale and participation.Finally,this paper analyzes the indispensability of informal insurance in such areas,and puts forward policy recommendations for the farmers’ risk sharing.It also discusses how the informal insurance cooperates with formal insurance for the farmers’ risk sharing in such areas in the current institutional environment.Innovative of this study lies in the empirical test of the effect of impact on the informal insurance risk sharing quota of social network,trust,reciprocity,participation four different social capital dimensions.And based on this,the paper puts forward some policy recmmendations to improve farmer’s risk sharing efficiency.