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Metamorphosis: The Credit Market of Low-Income Households in a Semi-Peripheral Country

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Abstract

In this paper, a theoretical model is developed on the basis of systems theory, which structures the livelihood system of low-income households in a European country characterized by a semi-peripheral economy. Based on the proposed model, the complex system of network connections and formal and informal financial transactions, which households use in their daily lives to cover their expenses, becomes graspable. The proposed theoretical model is analyzed through simulations based on agent-based modelling (ABM) centred on empirical network data. Through the simulations, the author explores the mechanisms of the market and asks what formal and informal credit transactions determine its operation, how these factors shape the local social structure and how resilient the market is to crises. The results show that this dynamic, complex risk-sharing system has an inherent logic and it can mitigate the small liquidity shocks but it is not resistant to bigger financial shocks or overconsumptions.

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Authors and Affiliations

  1. Asia-Europe Institute, University Malaya, Federal Territory of Kuala Lumpur, Kuala Lumpur, 50603, Malaysia

    Márton Gosztonyi

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  1. Márton Gosztonyi
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Correspondence to Márton Gosztonyi.

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This research was supported by the Hungarian National Research Fund, in the framework of the research project “Moralities of dependent relations in the era of financialisation” under Grant No. K-143543.

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Gosztonyi, M. Metamorphosis: The Credit Market of Low-Income Households in a Semi-Peripheral Country. J Syst Sci Complex 36, 2434–2466 (2023). https://doi.org/10.1007/s11424-023-1472-x

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  • DOI: https://doi.org/10.1007/s11424-023-1472-x

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