Insurance, Credit, and Technology Adoption : Field Experimental Evidence from Malawi
The adoption of new agricultural technologies may be discouraged because of their inherent riskiness. This study implemented a randomized field experiment to ask whether the provision of insurance against a major source of production risk induces f...
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| Format: | Policy Research Working Paper |
| Language: | English |
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World Bank, Washington, DC
2012
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2007/12/8828562/insurance-credit-technology-adoption-field-experimental-evidence-malawi http://hdl.handle.net/10986/7611 |
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okr-10986-7611 |
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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 |
| topic |
ACCESS TO CAPITAL ACCESS TO CREDIT ACCESS TO INFORMATION ADVERTISEMENTS AGRICULTURAL ACTIVITIES AGRICULTURAL HOUSEHOLD MODEL AGRICULTURAL LABOR AGRICULTURAL PRODUCTION AGRICULTURAL PRODUCTIVITY AVERAGE YIELDS BANK POLICY BANKS BEHAVIORAL ECONOMICS BORROWER BORROWING COLLATERAL COMMODITY COMMODITY RISK MANAGEMENT CONSUMER CONSUMER RESEARCH CONSUMERS CONSUMPTION SMOOTHING CORN COTTON CREDIT CONSTRAINTS CREDIT MARKET CREDIT MARKET FAILURE CREDIT MARKETS CREDIT PROGRAM CROP CROP LOSS CROP PRODUCTION CROP VARIETIES CROPPING CROPS CULTIVATION CULTIVATION PRACTICES DEBT DEFAULT COSTS DEMAND FOR CREDIT DEPOSIT DEVELOPING COUNTRIES DROUGHT DUMMY VARIABLE DUMMY VARIABLES ECONOMIC ANALYSIS ECONOMIC DEVELOPMENT EDUCATION LEVELS EQUIPMENT EXPENDITURE FAIR PRICE FARM FARM INCOME FARMER FARMERS FARMING FARMS FERTILIZER FERTILIZER USE FIELD TRIALS FINANCIAL CONSTRAINTS FINANCIAL INNOVATIONS FINANCIAL MARKET FINANCIAL MARKETS FINANCIAL PRODUCTS FINANCIAL SUPPORT FUTURE CREDIT GENDER GOVERNMENT INTERVENTIONS GREEN REVOLUTION GROUNDNUT GROUNDNUT PRODUCTION HOLDINGS HOUSEHOLD INCOME HOUSEHOLDS HUMAN CAPITAL HYBRID SEED HYBRID SEEDS INCOME INCOME TAX INCOME VARIABILITY INCOME-GENERATING ACTIVITIES INCOMES INFORMATIONAL ASYMMETRIES INNOVATION INSURANCE INSURANCE COMPANIES INSURANCE COMPANY INSURANCE CONTRACT INSURANCE MARKETS INSURANCE POLICIES INSURANCE POLICY INSURANCE PREMIUM INSURANCE PRODUCT INTEREST PAYMENT INTEREST RATE INTERNATIONAL BANK INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE INVESTING IRA IRA CONTRIBUTIONS LABOR DEMAND LABOR MARKETS LACK OF ACCESS LAND OWNERSHIP LANDHOLDERS LENDER LENDERS LIABILITY LIGHTING LIMITED ACCESS LIQUID WEALTH LOAN LOAN AMOUNT LOAN PRODUCT LOAN TERMS LOANS TO FARMERS MAIZE MAIZE PRODUCTION MARKETING MARKETING EFFORTS MICROFINANCE MICROFINANCE INSTITUTIONS MIDDLE-INCOME FAMILIES NEGATIVE INCOME SHOCK NONPAYMENT PENSION PENSION INCOME PEOPLES PESTICIDE PLANTING POLITICAL ECONOMY POOR FARMER POSITIVE COEFFICIENTS PREMIUM PAYMENT PROBABILITIES PROBABILITY PRODUCTIVITY PUBLIC POLICY REMITTANCES REPAYMENT RESEARCH ASSISTANCE RETURN RETURNS RISK AVERSE BORROWERS RISK AVERSION RISK MANAGEMENT RISK TOLERANCE RURAL FINANCE SALE SAVERS SAVING INCENTIVES SEEDS SMALLHOLDER SMALLHOLDER FARMERS SOCIOECONOMIC STATUS SOURCE OF INCOME SOURCES OF INCOME SOWING STANDARD DEBT CONTRACT TAKE-UP RATE TAKE-UP RATES TAX CODE TECHNICAL ASSISTANCE TRADITIONAL SEEDS VALUABLE VALUATION VILLAGES WAGES WATER SOURCE WEALTH EFFECTS YIELDS Microdata Set |
| spellingShingle |
ACCESS TO CAPITAL ACCESS TO CREDIT ACCESS TO INFORMATION ADVERTISEMENTS AGRICULTURAL ACTIVITIES AGRICULTURAL HOUSEHOLD MODEL AGRICULTURAL LABOR AGRICULTURAL PRODUCTION AGRICULTURAL PRODUCTIVITY AVERAGE YIELDS BANK POLICY BANKS BEHAVIORAL ECONOMICS BORROWER BORROWING COLLATERAL COMMODITY COMMODITY RISK MANAGEMENT CONSUMER CONSUMER RESEARCH CONSUMERS CONSUMPTION SMOOTHING CORN COTTON CREDIT CONSTRAINTS CREDIT MARKET CREDIT MARKET FAILURE CREDIT MARKETS CREDIT PROGRAM CROP CROP LOSS CROP PRODUCTION CROP VARIETIES CROPPING CROPS CULTIVATION CULTIVATION PRACTICES DEBT DEFAULT COSTS DEMAND FOR CREDIT DEPOSIT DEVELOPING COUNTRIES DROUGHT DUMMY VARIABLE DUMMY VARIABLES ECONOMIC ANALYSIS ECONOMIC DEVELOPMENT EDUCATION LEVELS EQUIPMENT EXPENDITURE FAIR PRICE FARM FARM INCOME FARMER FARMERS FARMING FARMS FERTILIZER FERTILIZER USE FIELD TRIALS FINANCIAL CONSTRAINTS FINANCIAL INNOVATIONS FINANCIAL MARKET FINANCIAL MARKETS FINANCIAL PRODUCTS FINANCIAL SUPPORT FUTURE CREDIT GENDER GOVERNMENT INTERVENTIONS GREEN REVOLUTION GROUNDNUT GROUNDNUT PRODUCTION HOLDINGS HOUSEHOLD INCOME HOUSEHOLDS HUMAN CAPITAL HYBRID SEED HYBRID SEEDS INCOME INCOME TAX INCOME VARIABILITY INCOME-GENERATING ACTIVITIES INCOMES INFORMATIONAL ASYMMETRIES INNOVATION INSURANCE INSURANCE COMPANIES INSURANCE COMPANY INSURANCE CONTRACT INSURANCE MARKETS INSURANCE POLICIES INSURANCE POLICY INSURANCE PREMIUM INSURANCE PRODUCT INTEREST PAYMENT INTEREST RATE INTERNATIONAL BANK INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE INVESTING IRA IRA CONTRIBUTIONS LABOR DEMAND LABOR MARKETS LACK OF ACCESS LAND OWNERSHIP LANDHOLDERS LENDER LENDERS LIABILITY LIGHTING LIMITED ACCESS LIQUID WEALTH LOAN LOAN AMOUNT LOAN PRODUCT LOAN TERMS LOANS TO FARMERS MAIZE MAIZE PRODUCTION MARKETING MARKETING EFFORTS MICROFINANCE MICROFINANCE INSTITUTIONS MIDDLE-INCOME FAMILIES NEGATIVE INCOME SHOCK NONPAYMENT PENSION PENSION INCOME PEOPLES PESTICIDE PLANTING POLITICAL ECONOMY POOR FARMER POSITIVE COEFFICIENTS PREMIUM PAYMENT PROBABILITIES PROBABILITY PRODUCTIVITY PUBLIC POLICY REMITTANCES REPAYMENT RESEARCH ASSISTANCE RETURN RETURNS RISK AVERSE BORROWERS RISK AVERSION RISK MANAGEMENT RISK TOLERANCE RURAL FINANCE SALE SAVERS SAVING INCENTIVES SEEDS SMALLHOLDER SMALLHOLDER FARMERS SOCIOECONOMIC STATUS SOURCE OF INCOME SOURCES OF INCOME SOWING STANDARD DEBT CONTRACT TAKE-UP RATE TAKE-UP RATES TAX CODE TECHNICAL ASSISTANCE TRADITIONAL SEEDS VALUABLE VALUATION VILLAGES WAGES WATER SOURCE WEALTH EFFECTS YIELDS Microdata Set Giné, Xavier Yang, Dean Insurance, Credit, and Technology Adoption : Field Experimental Evidence from Malawi |
| geographic_facet |
Africa Malawi |
| relation |
Policy Research Working Paper; No. 4425 |
| description |
The adoption of new agricultural
technologies may be discouraged because of their inherent
riskiness. This study implemented a randomized field
experiment to ask whether the provision of insurance against
a major source of production risk induces farmers to take
out loans to invest in a new crop variety. The study sample
was composed of roughly 800 maize and groundnut farmers in
Malawi, where by far the dominant source of production risk
is the level of rainfall. We randomly selected half of the
farmers to be offered credit to purchase high-yielding
hybrid maize and improved groundnut seeds for planting in
the November 2006 crop season. The other half of the farmers
were offered a similar credit package but were also required
to purchase (at actuarially fair rates) a weather insurance
policy that partially or fully forgave the loan in the event
of poor rainfall. Surprisingly, take up was lower by 13
percentage points among farmers offered insurance with the
loan. Take-up was 33.0 percent for farmers who were offered
the uninsured loan. There is suggestive evidence that the
reduced take-up of the insured loan was due to the high
cognitive cost of evaluating the insurance: insured loan
take-up was positively correlated with farmer education
levels. By contrast, the take-up of the uninsured loan was
uncorrelated with farmer education. |
| format |
Publications & Research :: Policy Research Working Paper |
| author |
Giné, Xavier Yang, Dean |
| author_facet |
Giné, Xavier Yang, Dean |
| author_sort |
Giné, Xavier |
| title |
Insurance, Credit, and Technology Adoption : Field Experimental Evidence from Malawi |
| title_short |
Insurance, Credit, and Technology Adoption : Field Experimental Evidence from Malawi |
| title_full |
Insurance, Credit, and Technology Adoption : Field Experimental Evidence from Malawi |
| title_fullStr |
Insurance, Credit, and Technology Adoption : Field Experimental Evidence from Malawi |
| title_full_unstemmed |
Insurance, Credit, and Technology Adoption : Field Experimental Evidence from Malawi |
| title_sort |
insurance, credit, and technology adoption : field experimental evidence from malawi |
| publisher |
World Bank, Washington, DC |
| publishDate |
2012 |
| url |
http://documents.worldbank.org/curated/en/2007/12/8828562/insurance-credit-technology-adoption-field-experimental-evidence-malawi http://hdl.handle.net/10986/7611 |
| _version_ |
1764402589272637440 |
| spelling |
okr-10986-76112021-04-23T14:02:34Z Insurance, Credit, and Technology Adoption : Field Experimental Evidence from Malawi Giné, Xavier Yang, Dean ACCESS TO CAPITAL ACCESS TO CREDIT ACCESS TO INFORMATION ADVERTISEMENTS AGRICULTURAL ACTIVITIES AGRICULTURAL HOUSEHOLD MODEL AGRICULTURAL LABOR AGRICULTURAL PRODUCTION AGRICULTURAL PRODUCTIVITY AVERAGE YIELDS BANK POLICY BANKS BEHAVIORAL ECONOMICS BORROWER BORROWING COLLATERAL COMMODITY COMMODITY RISK MANAGEMENT CONSUMER CONSUMER RESEARCH CONSUMERS CONSUMPTION SMOOTHING CORN COTTON CREDIT CONSTRAINTS CREDIT MARKET CREDIT MARKET FAILURE CREDIT MARKETS CREDIT PROGRAM CROP CROP LOSS CROP PRODUCTION CROP VARIETIES CROPPING CROPS CULTIVATION CULTIVATION PRACTICES DEBT DEFAULT COSTS DEMAND FOR CREDIT DEPOSIT DEVELOPING COUNTRIES DROUGHT DUMMY VARIABLE DUMMY VARIABLES ECONOMIC ANALYSIS ECONOMIC DEVELOPMENT EDUCATION LEVELS EQUIPMENT EXPENDITURE FAIR PRICE FARM FARM INCOME FARMER FARMERS FARMING FARMS FERTILIZER FERTILIZER USE FIELD TRIALS FINANCIAL CONSTRAINTS FINANCIAL INNOVATIONS FINANCIAL MARKET FINANCIAL MARKETS FINANCIAL PRODUCTS FINANCIAL SUPPORT FUTURE CREDIT GENDER GOVERNMENT INTERVENTIONS GREEN REVOLUTION GROUNDNUT GROUNDNUT PRODUCTION HOLDINGS HOUSEHOLD INCOME HOUSEHOLDS HUMAN CAPITAL HYBRID SEED HYBRID SEEDS INCOME INCOME TAX INCOME VARIABILITY INCOME-GENERATING ACTIVITIES INCOMES INFORMATIONAL ASYMMETRIES INNOVATION INSURANCE INSURANCE COMPANIES INSURANCE COMPANY INSURANCE CONTRACT INSURANCE MARKETS INSURANCE POLICIES INSURANCE POLICY INSURANCE PREMIUM INSURANCE PRODUCT INTEREST PAYMENT INTEREST RATE INTERNATIONAL BANK INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE INVESTING IRA IRA CONTRIBUTIONS LABOR DEMAND LABOR MARKETS LACK OF ACCESS LAND OWNERSHIP LANDHOLDERS LENDER LENDERS LIABILITY LIGHTING LIMITED ACCESS LIQUID WEALTH LOAN LOAN AMOUNT LOAN PRODUCT LOAN TERMS LOANS TO FARMERS MAIZE MAIZE PRODUCTION MARKETING MARKETING EFFORTS MICROFINANCE MICROFINANCE INSTITUTIONS MIDDLE-INCOME FAMILIES NEGATIVE INCOME SHOCK NONPAYMENT PENSION PENSION INCOME PEOPLES PESTICIDE PLANTING POLITICAL ECONOMY POOR FARMER POSITIVE COEFFICIENTS PREMIUM PAYMENT PROBABILITIES PROBABILITY PRODUCTIVITY PUBLIC POLICY REMITTANCES REPAYMENT RESEARCH ASSISTANCE RETURN RETURNS RISK AVERSE BORROWERS RISK AVERSION RISK MANAGEMENT RISK TOLERANCE RURAL FINANCE SALE SAVERS SAVING INCENTIVES SEEDS SMALLHOLDER SMALLHOLDER FARMERS SOCIOECONOMIC STATUS SOURCE OF INCOME SOURCES OF INCOME SOWING STANDARD DEBT CONTRACT TAKE-UP RATE TAKE-UP RATES TAX CODE TECHNICAL ASSISTANCE TRADITIONAL SEEDS VALUABLE VALUATION VILLAGES WAGES WATER SOURCE WEALTH EFFECTS YIELDS Microdata Set The adoption of new agricultural technologies may be discouraged because of their inherent riskiness. This study implemented a randomized field experiment to ask whether the provision of insurance against a major source of production risk induces farmers to take out loans to invest in a new crop variety. The study sample was composed of roughly 800 maize and groundnut farmers in Malawi, where by far the dominant source of production risk is the level of rainfall. We randomly selected half of the farmers to be offered credit to purchase high-yielding hybrid maize and improved groundnut seeds for planting in the November 2006 crop season. The other half of the farmers were offered a similar credit package but were also required to purchase (at actuarially fair rates) a weather insurance policy that partially or fully forgave the loan in the event of poor rainfall. Surprisingly, take up was lower by 13 percentage points among farmers offered insurance with the loan. Take-up was 33.0 percent for farmers who were offered the uninsured loan. There is suggestive evidence that the reduced take-up of the insured loan was due to the high cognitive cost of evaluating the insurance: insured loan take-up was positively correlated with farmer education levels. By contrast, the take-up of the uninsured loan was uncorrelated with farmer education. 2012-06-08T21:50:26Z 2012-06-08T21:50:26Z 2007-12 http://documents.worldbank.org/curated/en/2007/12/8828562/insurance-credit-technology-adoption-field-experimental-evidence-malawi http://hdl.handle.net/10986/7611 English Policy Research Working Paper; No. 4425 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo World Bank World Bank, Washington, DC Publications & Research :: Policy Research Working Paper Publications & Research Africa Malawi |