Agricultural Decisions after Relaxing Credit and Risk Constraints *
University of Ghana · Yale University · +1 more institution
Abstract
Abstract The investment decisions of small-scale farmers in developing countries are conditioned by their financial environment. Binding credit market constraints and incomplete insurance can limit investment in activities with high expected profits. We conducted several experiments in northern Ghana in which farmers were randomly assigned to receive cash grants, grants of or opportunities to purchase rainfall index insurance, or a combination of the two. Demand for index insurance is strong, and insurance leads to significantly larger agricultural investment and riskier production choices in agriculture. The binding constraint to farmer investment is uninsured risk: when provided with insurance against the…
Citation impact
- FWCI
- 79.61
- Percentile
- 100%
- References
- 39
Authors
4- DKDean KarlanCorresponding
University of Ghana, Yale University, Abdul Latif Jameel Poverty Action Lab
- RORobert Osei
University of Ghana, Yale University, Abdul Latif Jameel Poverty Action Lab
- IOIsaac Osei‐Akoto
University of Ghana, Yale University, Abdul Latif Jameel Poverty Action Lab
- CUChristopher Udry
University of Ghana, Yale University, Abdul Latif Jameel Poverty Action Lab
Topics & keywords
- Receipt
- Investment (military)
- Index (typography)
- Economics
- Actuarial science
- Investment decisions
- Cash
- Basis risk
- No poverty