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Are assets-poor individuals excluded from risk-sharing mechanisms? Evidence from rural Rwanda

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We investigate, in this paper, to which extent the socio-economic status of rural Rwandans determines participation in informal groups oering nancial services. We exploit rst-hand individual survey data from two Eastern districts in Rwanda including rich information on group membership and group member characteristics. Our goal is to explore whether membership in these informal groups is restricted to better-o households. We observe that it is crucial to distinguish groups by type of services oered. While asset-poor households are less likely to be members of groups offering credit and savings services, a reverse tendency is observed for groups offering insurance services. In addition, the analysis nds that poor are also disproportionately excluded from formal and informal nancial alternatives to groups. Finally, public intervention, though very carefully implemented in the country, is not sufficient to provide social protection to the bottom poor. Nevertheless, a key nding of this study is that public intervention emerges as complementing decentralized access to nancial services. In other words, Rwandan public funds mostly benefit the otherwise-excluded poor.

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