Are remittances a source of finance for private adaptation strategy? Evidence from a natural experiment in the Cyclone Sidr hit regions of southern Bangladesh

We model household responses to storm protection actions in an endogenous risk
framework and then test the predictions based on a recently concluded survey from
southern Bangladesh hit by the category-5 Cyclone-Sidr in 2007. Households decide on
the margin how to finance private adaptive expenditures and foreign remittances come
into play a pivotal role in shaping private adaptive behaviour. For our empirical analysis,
we use IV method to harness a random assignment of treatment of remittances by
exploiting a natural shock wherein some households suffered damages from another
second Cyclone-Roanu in the same area just prior to the survey period in 2016. Using
natural experiment as an identification strategy, we find that for every 1,000 Taka
increase in remittances receipts, private adaptive expenditures increase by 20.95 Taka.
The IV results are generalizable because the cont