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In this paper, we investigate
the role of the social network nexus and the insurance nexus in determining
household savings and productive capital formation in rural Vietnam. We analyze
the issue in two dimensions, stocks and flows, and consider the exposure to
negative shocks. The instrumental variable method is employed and unlike
previous studies, we account for the endogeneity of all concerned variables.
The results indicate that the social network nexus has more impacts in “ex ante” rather than in “ex post” households. In both households
groups, the effects of the insurance nexus dominate over those of the social
network nexus. In the case of the stocks, we also find that the precautionary
view holds in liquid assets but not in productive assets.