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The impact of index‐insured loans on credit market participation and risk‐taking

Author

Listed:
  • Richard A. Gallenstein
  • Jon Einar Flatnes
  • John P. Dougherty
  • Abdoul G. Sam
  • Khushbu Mishra

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.

Suggested Citation

  • Richard A. Gallenstein & Jon Einar Flatnes & John P. Dougherty & Abdoul G. Sam & Khushbu Mishra, 2021. "The impact of index‐insured loans on credit market participation and risk‐taking," Agricultural Economics, International Association of Agricultural Economists, vol. 52(1), pages 141-156, January.
    • Handle: RePEc:bla:agecon:v:52:y:2021:i:1:p:141-156
    DOI: 10.1111/agec.12611
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    Cited by:

    1. Khushbu Mishra & Richard A. Gallenstein & Abdoul G. Sam & Mario J. Miranda & Patricia Toledo & Francis Mulangu, 2023. "Does bundling credit with index insurance boost agricultural technology adoption? Evidence from Ghana," Agricultural Economics, International Association of Agricultural Economists, vol. 54(6), pages 778-792, November.
    2. Gallenstein, Richard A., 2022. "Inequality and risk management: Evidence from a lab experiment in Ghana," Economics Letters, Elsevier, vol. 211(C).

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