This study approaches shocks and finance from a household's point of perspective. It aims to enhance the understanding of shock profiles of households in rural Vietnam and the coping actions they take to recover in the aftermath of shocks in the current rural financial market setting. Doing so, this study, firstly, reviews the related literature to identify the limitations to formal households finance in developing countries as well as its coexistence with informal finance. Secondly, based on an extensive household survey database empirical evidence is provided on the shock profiles of rural Vietnamese households (types of shocks, their frequency and impact on income and assets), the vivid coexistence of formal and informal household finance, the utilisation of financial and other coping actions as well as the subjective recovery of households after shocks. With respect to the shock profiles revealed by the data, the study is concluded by discussing the potential of recent innovations in microinsurance (e.g. index-based insurances) for improving the living conditions of rural Vietnamese households.
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Global Risk Forum Davos