Categorising households based on shock severity experience: The effects of remittances on consumption smoothing post‐shock in Nigeria

Abstract

AbstractExisting literature suggests that remittances can help households in developing countries cope with post‐shock consumption. Focusing on Nigeria, where remittance receipts reached $25B in 2018 with increasing incidences of shocks, this study puts this claim to the test by categorising households into two: the group that suffered the most severe shock types and the group that suffered less severe shock types. Data is sourced from the World Bank and linearised regression results indicate that remittances benefit households that experienced less severe shocks than households that experienced the most severe shocks in their post‐shock consumption. Establishing a discriminatory financial market in favours of shock‐affected households is desirable to aid them in coping with post‐shock consumption.