Macroinsurance for Microenterprises : A Randomized Experiment in Post-Revolution Egypt
Firms in many developing countries cite macroeconomic instability and political uncertainty as major constraints to their growth. Economic theory suggests uncertainty can cause firms to delay investments until uncertainty is resolved. A randomized...
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| Format: | Publications & Research |
| Language: | English en_US |
| Published: |
World Bank Group, Washington, DC
2014
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2014/09/20238435/macroinsurance-microenterprises-randomized-experiment-post-revolution-egypt http://hdl.handle.net/10986/20368 |
| id |
okr-10986-20368 |
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| recordtype |
oai_dc |
| repository_type |
Digital Repository |
| institution_category |
Foreign Institution |
| institution |
Digital Repositories |
| building |
World Bank Open Knowledge Repository |
| collection |
World Bank |
| language |
English en_US |
| topic |
ACCESS TO FINANCE ACCESS TO FINANCING ACCOUNTING ACTUARIALLY FAIR INSURANCE AMOUNT OF LOAN APR ASSETS BANK LOAN BANK POLICY BANKING LAWS BANKS BORROWING BUSINESS ACTIVITY BUSINESS ASSOCIATION BUSINESS OWNER BUSINESS OWNERS BUSINESS RISK CAPITAL INVESTMENTS CAPITAL STOCK CASH FLOW CASH ON HAND CHECKS CONSUMERS CORRUPTION CREDIT OFFICER CURRENCY DEBT DEVELOPING COUNTRIES DEVELOPMENT ECONOMICS DISCOUNT RATE DUMMY VARIABLE ECONOMIC THEORY EDUCATION LEVELS ELIGIBILITY CRITERIA EMERGENCY LOAN EMPLOYEE EQUALITY EQUIPMENT EQUIPMENT PURCHASES EXCHANGE RATE FAIR PRICE FINANCIAL CRISIS FINANCIAL LITERACY FIRE INSURANCE FIRM PERFORMANCE GASOLINE PRICES GENDER GOVERNMENT SUBSIDIES GREATER ACCESS GROUP LOAN HEALTH INSURANCE HOUSEHOLD CONSUMPTION HOUSEHOLDS HUMAN CAPITAL INCOME INDIVIDUAL LOANS INFLATION INSTALLMENT INSTALLMENTS INSURANCE INSURANCE AGENCY INSURANCE COVERAGE INSURANCE MARKETS INSURANCE PAYMENTS INSURANCE PAYOUT INSURANCE PENETRATION INSURANCE POLICY INSURANCE PREMIUM INSURANCE PRODUCT INSURANCE PRODUCTS INSURANCE PROGRAM INSURANCE SERVICES INTEREST PAYMENT INTEREST RATE INTERNATIONAL BANK INVENTORIES INVENTORY INVESTING INVESTMENT ACTIVITIES INVESTMENT BEHAVIOR INVESTMENT CLIMATE INVESTMENT DECISIONS INVESTMENT OPPORTUNITIES LACK OF KNOWLEDGE LEGAL SYSTEM LIFE INSURANCE LIFE INSURANCE PREMIUMS LIQUIDITY LOAN LOAN AMOUNT LOAN AMOUNTS LOAN OFFICER LOAN OFFICERS LOAN PERIOD LOAN PRINCIPAL LOAN PROGRAM LOAN SIZE LOAN SIZES LONG-TERM INVESTMENTS MACROECONOMIC INSTABILITY MACROECONOMIC RISKS MACROECONOMIC UNCERTAINTY MARGINAL COEFFICIENTS MARKET PRICES MEDIAN FIRM MFIS MICROENTERPRISES MICROFINANCE MICROFINANCE INSTITUTION MICROFINANCE INSTITUTIONS MICROFINANCE LOAN MICROFINANCE LOANS NEED FOR CREDIT NEGOTIATIONS NEW MARKET POLICY ANALYSIS POLITICAL RISK POLITICAL RISKS POLITICAL UNCERTAINTY PORTFOLIOS PRINCIPAL PAYMENT PROFITABILITY PUBLIC POLICY REFERENDUM REGULATORY CONSTRAINTS REGULATORY POLICY REPAYMENT RESERVES RETURN RETURNS RISK AVERSION RISK MANAGEMENT RISK OF DEFAULTS RISK SHARING SAVINGS SET ASIDE SMALL BUSINESS SMALL BUSINESS OWNERS SMALL ENTERPRISES SOCIAL FUND SOURCES OF FINANCE STOCK EXCHANGE STOCK MARKET SUBSISTENCE FARMERS SUBSTITUTION TAX TAX RATES TELECOMMUNICATIONS TRUST FUNDS VILLAGES WEATHER INSURANCE WORKING CAPITAL |
| spellingShingle |
ACCESS TO FINANCE ACCESS TO FINANCING ACCOUNTING ACTUARIALLY FAIR INSURANCE AMOUNT OF LOAN APR ASSETS BANK LOAN BANK POLICY BANKING LAWS BANKS BORROWING BUSINESS ACTIVITY BUSINESS ASSOCIATION BUSINESS OWNER BUSINESS OWNERS BUSINESS RISK CAPITAL INVESTMENTS CAPITAL STOCK CASH FLOW CASH ON HAND CHECKS CONSUMERS CORRUPTION CREDIT OFFICER CURRENCY DEBT DEVELOPING COUNTRIES DEVELOPMENT ECONOMICS DISCOUNT RATE DUMMY VARIABLE ECONOMIC THEORY EDUCATION LEVELS ELIGIBILITY CRITERIA EMERGENCY LOAN EMPLOYEE EQUALITY EQUIPMENT EQUIPMENT PURCHASES EXCHANGE RATE FAIR PRICE FINANCIAL CRISIS FINANCIAL LITERACY FIRE INSURANCE FIRM PERFORMANCE GASOLINE PRICES GENDER GOVERNMENT SUBSIDIES GREATER ACCESS GROUP LOAN HEALTH INSURANCE HOUSEHOLD CONSUMPTION HOUSEHOLDS HUMAN CAPITAL INCOME INDIVIDUAL LOANS INFLATION INSTALLMENT INSTALLMENTS INSURANCE INSURANCE AGENCY INSURANCE COVERAGE INSURANCE MARKETS INSURANCE PAYMENTS INSURANCE PAYOUT INSURANCE PENETRATION INSURANCE POLICY INSURANCE PREMIUM INSURANCE PRODUCT INSURANCE PRODUCTS INSURANCE PROGRAM INSURANCE SERVICES INTEREST PAYMENT INTEREST RATE INTERNATIONAL BANK INVENTORIES INVENTORY INVESTING INVESTMENT ACTIVITIES INVESTMENT BEHAVIOR INVESTMENT CLIMATE INVESTMENT DECISIONS INVESTMENT OPPORTUNITIES LACK OF KNOWLEDGE LEGAL SYSTEM LIFE INSURANCE LIFE INSURANCE PREMIUMS LIQUIDITY LOAN LOAN AMOUNT LOAN AMOUNTS LOAN OFFICER LOAN OFFICERS LOAN PERIOD LOAN PRINCIPAL LOAN PROGRAM LOAN SIZE LOAN SIZES LONG-TERM INVESTMENTS MACROECONOMIC INSTABILITY MACROECONOMIC RISKS MACROECONOMIC UNCERTAINTY MARGINAL COEFFICIENTS MARKET PRICES MEDIAN FIRM MFIS MICROENTERPRISES MICROFINANCE MICROFINANCE INSTITUTION MICROFINANCE INSTITUTIONS MICROFINANCE LOAN MICROFINANCE LOANS NEED FOR CREDIT NEGOTIATIONS NEW MARKET POLICY ANALYSIS POLITICAL RISK POLITICAL RISKS POLITICAL UNCERTAINTY PORTFOLIOS PRINCIPAL PAYMENT PROFITABILITY PUBLIC POLICY REFERENDUM REGULATORY CONSTRAINTS REGULATORY POLICY REPAYMENT RESERVES RETURN RETURNS RISK AVERSION RISK MANAGEMENT RISK OF DEFAULTS RISK SHARING SAVINGS SET ASIDE SMALL BUSINESS SMALL BUSINESS OWNERS SMALL ENTERPRISES SOCIAL FUND SOURCES OF FINANCE STOCK EXCHANGE STOCK MARKET SUBSISTENCE FARMERS SUBSTITUTION TAX TAX RATES TELECOMMUNICATIONS TRUST FUNDS VILLAGES WEATHER INSURANCE WORKING CAPITAL Groh, Matthew McKenzie, David Macroinsurance for Microenterprises : A Randomized Experiment in Post-Revolution Egypt |
| geographic_facet |
Middle East and North Africa Egypt, Arab Republic of |
| relation |
Policy Research Working Paper;No. 7048 |
| description |
Firms in many developing countries cite
macroeconomic instability and political uncertainty as major
constraints to their growth. Economic theory suggests
uncertainty can cause firms to delay investments until
uncertainty is resolved. A randomized experiment was
conducted in post-revolution Egypt to measure the impact of
insuring microenterprises against macroeconomic and
political uncertainty. Demand for macroeconomic shock
insurance was high; 36.7 percent of microentrepreneurs in
the treatment group purchased insurance. However, purchasing
insurance does not change the likelihood that a business
takes a new loan, the size of the loan, or how the loan is
invested. This lack of effect is attributed to
microenterprises largely investing in inventories and raw
materials rather than irreversible investments like
equipment. These results suggest that, contrary to what some
firms profess, macroeconomic and political risk is not
inhibiting the investment behavior of microenterprises.
However, insurance may still be of value to help firms cope
with shocks when they do occur, but the paper is unable to
examine this dimension, because the insurance product did
not pay out over the course of the pilot. |
| format |
Publications & Research |
| author |
Groh, Matthew McKenzie, David |
| author_facet |
Groh, Matthew McKenzie, David |
| author_sort |
Groh, Matthew |
| title |
Macroinsurance for Microenterprises : A Randomized Experiment in Post-Revolution Egypt |
| title_short |
Macroinsurance for Microenterprises : A Randomized Experiment in Post-Revolution Egypt |
| title_full |
Macroinsurance for Microenterprises : A Randomized Experiment in Post-Revolution Egypt |
| title_fullStr |
Macroinsurance for Microenterprises : A Randomized Experiment in Post-Revolution Egypt |
| title_full_unstemmed |
Macroinsurance for Microenterprises : A Randomized Experiment in Post-Revolution Egypt |
| title_sort |
macroinsurance for microenterprises : a randomized experiment in post-revolution egypt |
| publisher |
World Bank Group, Washington, DC |
| publishDate |
2014 |
| url |
http://documents.worldbank.org/curated/en/2014/09/20238435/macroinsurance-microenterprises-randomized-experiment-post-revolution-egypt http://hdl.handle.net/10986/20368 |
| _version_ |
1764445172298416128 |
| spelling |
okr-10986-203682021-04-23T14:03:55Z Macroinsurance for Microenterprises : A Randomized Experiment in Post-Revolution Egypt Groh, Matthew McKenzie, David ACCESS TO FINANCE ACCESS TO FINANCING ACCOUNTING ACTUARIALLY FAIR INSURANCE AMOUNT OF LOAN APR ASSETS BANK LOAN BANK POLICY BANKING LAWS BANKS BORROWING BUSINESS ACTIVITY BUSINESS ASSOCIATION BUSINESS OWNER BUSINESS OWNERS BUSINESS RISK CAPITAL INVESTMENTS CAPITAL STOCK CASH FLOW CASH ON HAND CHECKS CONSUMERS CORRUPTION CREDIT OFFICER CURRENCY DEBT DEVELOPING COUNTRIES DEVELOPMENT ECONOMICS DISCOUNT RATE DUMMY VARIABLE ECONOMIC THEORY EDUCATION LEVELS ELIGIBILITY CRITERIA EMERGENCY LOAN EMPLOYEE EQUALITY EQUIPMENT EQUIPMENT PURCHASES EXCHANGE RATE FAIR PRICE FINANCIAL CRISIS FINANCIAL LITERACY FIRE INSURANCE FIRM PERFORMANCE GASOLINE PRICES GENDER GOVERNMENT SUBSIDIES GREATER ACCESS GROUP LOAN HEALTH INSURANCE HOUSEHOLD CONSUMPTION HOUSEHOLDS HUMAN CAPITAL INCOME INDIVIDUAL LOANS INFLATION INSTALLMENT INSTALLMENTS INSURANCE INSURANCE AGENCY INSURANCE COVERAGE INSURANCE MARKETS INSURANCE PAYMENTS INSURANCE PAYOUT INSURANCE PENETRATION INSURANCE POLICY INSURANCE PREMIUM INSURANCE PRODUCT INSURANCE PRODUCTS INSURANCE PROGRAM INSURANCE SERVICES INTEREST PAYMENT INTEREST RATE INTERNATIONAL BANK INVENTORIES INVENTORY INVESTING INVESTMENT ACTIVITIES INVESTMENT BEHAVIOR INVESTMENT CLIMATE INVESTMENT DECISIONS INVESTMENT OPPORTUNITIES LACK OF KNOWLEDGE LEGAL SYSTEM LIFE INSURANCE LIFE INSURANCE PREMIUMS LIQUIDITY LOAN LOAN AMOUNT LOAN AMOUNTS LOAN OFFICER LOAN OFFICERS LOAN PERIOD LOAN PRINCIPAL LOAN PROGRAM LOAN SIZE LOAN SIZES LONG-TERM INVESTMENTS MACROECONOMIC INSTABILITY MACROECONOMIC RISKS MACROECONOMIC UNCERTAINTY MARGINAL COEFFICIENTS MARKET PRICES MEDIAN FIRM MFIS MICROENTERPRISES MICROFINANCE MICROFINANCE INSTITUTION MICROFINANCE INSTITUTIONS MICROFINANCE LOAN MICROFINANCE LOANS NEED FOR CREDIT NEGOTIATIONS NEW MARKET POLICY ANALYSIS POLITICAL RISK POLITICAL RISKS POLITICAL UNCERTAINTY PORTFOLIOS PRINCIPAL PAYMENT PROFITABILITY PUBLIC POLICY REFERENDUM REGULATORY CONSTRAINTS REGULATORY POLICY REPAYMENT RESERVES RETURN RETURNS RISK AVERSION RISK MANAGEMENT RISK OF DEFAULTS RISK SHARING SAVINGS SET ASIDE SMALL BUSINESS SMALL BUSINESS OWNERS SMALL ENTERPRISES SOCIAL FUND SOURCES OF FINANCE STOCK EXCHANGE STOCK MARKET SUBSISTENCE FARMERS SUBSTITUTION TAX TAX RATES TELECOMMUNICATIONS TRUST FUNDS VILLAGES WEATHER INSURANCE WORKING CAPITAL Firms in many developing countries cite macroeconomic instability and political uncertainty as major constraints to their growth. Economic theory suggests uncertainty can cause firms to delay investments until uncertainty is resolved. A randomized experiment was conducted in post-revolution Egypt to measure the impact of insuring microenterprises against macroeconomic and political uncertainty. Demand for macroeconomic shock insurance was high; 36.7 percent of microentrepreneurs in the treatment group purchased insurance. However, purchasing insurance does not change the likelihood that a business takes a new loan, the size of the loan, or how the loan is invested. This lack of effect is attributed to microenterprises largely investing in inventories and raw materials rather than irreversible investments like equipment. These results suggest that, contrary to what some firms profess, macroeconomic and political risk is not inhibiting the investment behavior of microenterprises. However, insurance may still be of value to help firms cope with shocks when they do occur, but the paper is unable to examine this dimension, because the insurance product did not pay out over the course of the pilot. 2014-10-06T20:17:18Z 2014-10-06T20:17:18Z 2014-09 http://documents.worldbank.org/curated/en/2014/09/20238435/macroinsurance-microenterprises-randomized-experiment-post-revolution-egypt http://hdl.handle.net/10986/20368 English en_US Policy Research Working Paper;No. 7048 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank Group, Washington, DC Publications & Research Publications & Research :: Policy Research Working Paper Middle East and North Africa Egypt, Arab Republic of |