The impact of index‐insured loans on credit market participation and risk‐taking. (15th January 2021)

• Record Type: Journal Article
• Authors: Gallenstein, Richard A.; Flatnes, Jon Einar; Dougherty, John P.; Sam, Abdoul G.; Mishra, Khushbu
• Is Part Of: Agricultural economics. Volume 52:Number 1(2021)
• Page Start: 141
• Page End: 156
• Publication Date: 2021-01-15
• Subjects: framed field experiment -- index insurance -- microfinance -- risk‐taking; Agriculture -- Economic aspects -- Periodicals; 338.105
• DOI: 10.1111/agec.12611
• Languages: English
• ISSNs: 0169-5150

Abstract

Abstract: Index‐insured loans offer considerable advantages over standalone insurance policies for improving farmers' access to agricultural credit. However, research on demand for such products and their impact on profitable investment decisions has been limited and conflicting. In this article, we investigate the impact of index insurance on demand for credit and investment decisions using a lab‐in‐the‐field experiment conducted in rural Tanzania. We find that index insurance increases demand for credit and high‐risk high‐return investments.