Locking Crops to Unlock Investment : Experimental Evidence on Warrantage in Burkina Faso
Financial market imperfections remain pervasive in developing countries, constraining potentially profitable investment decisions, especially for rural smallholder farmers. Warrantage is an innovative model of rural finance with the potential to ov...
| Main Authors: | , |
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| Format: | Working Paper |
| Language: | English |
| Published: |
World Bank, Washington, DC
2020
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/415991589810744520/Locking-Crops-to-Unlock-Investment-Experimental-Evidence-on-Warrantage-in-Burkina-Faso http://hdl.handle.net/10986/33795 |
| Summary: | Financial market imperfections remain
pervasive in developing countries, constraining potentially
profitable investment decisions, especially for rural
smallholder farmers. Warrantage is an innovative model of
rural finance with the potential to overcome credit,
storage, and commitment constraints through a localized
inventory credit scheme. Exploiting random variations in
household access to warrantage and intensity of access
across villages, this paper studies the direct impact of
this scheme on beneficiaries as well as its spillover
effects. Take-up of storage is high (94 percent), while
credit take-up is moderate (38 percent). Households with
access to warrantage primarily store sorghum and maize and
sell their production over an extended period of time,
earning higher average prices and resulting in higher sales
revenue ($248, or 33 percent, on average). Increased incomes
are spent on long-term investments, including human capital
expenditures (education), livestock purchases, and
investment in agricultural inputs for the subsequent year. |
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