Social networks and factor markets: panel data evidence from Ethiopia

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We investigate the role of an indigenous social network in Ethiopia, the iddir, in facilitating factor market transactions among smallholder farmers. We use a detailed longitudinal household survey data and employ a fixed effects estimation 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.
Original languageEnglish
JournalJournal of Development Studies
Issue number1
Pages (from-to)174-190
Publication statusPublished - 2018

ID: 222748633