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Do Farmers Demand Innovative Financial Products? A Case Study in Cambodia

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  • Qingxia Wang

    (Centre for Applied Climate Sciences, University of Southern Queensland, Toowoomba, QLD 4350, Australia)

  • Yim Soksophors

    (International Institute of Rural Reconstruction (IIRR), Phnom Penh 12000, Cambodia)

  • Khieng Phanna

    (International Institute of Rural Reconstruction (IIRR), Phnom Penh 12000, Cambodia)

  • Angelica Barlis

    (Alliance of Bioversity International and CIAT, Hanoi 100000, Vietnam)

  • Shahbaz Mushtaq

    (Centre for Applied Climate Sciences, University of Southern Queensland, Toowoomba, QLD 4350, Australia)

  • Danny Rodulfo

    (Alternative Risk Transfer Solutions, Willis Towers Watson (WTW), London EC3M 7DQ, UK)

  • Kees Swaans

    (Alliance of Bioversity International and CIAT, Hanoi 100000, Vietnam)

Abstract

This study examines Cambodian farmers’ demand for weather index insurance (WII), an innovative financial product , for managing climate change-related risks. Rice and cassava farmers in Battambang Province of Cambodia were interviewed to understand their preferences for WII. We applied a binary logistic model to quantify the factors that influence farmers’ WII demand. We discovered that farmers’ marital status and off-farm labor are crucial factors that impact the demand for WII. More importantly, we also investigated gender differences, considering the critical role of women in the agricultural sector and personality differences between men and women. Our findings indicated that for male respondents, being married and having an additional off-farm laborer increase the probability of demand for WII by 72.6% and 36.8%, respectively. For female respondents, the education level is the most significant factor in making purchase decisions. An additional year of education increases the probability of WII demand by 5.0%. Generally, our results are consistent with some prior studies but inconsistent with others. This suggests that further research is necessary to understand the barriers associated with WII schemes and how to overcome them. Regardless, our study provides valuable insights for various stakeholders in implementing WII schemes, including financial professionals, insurance companies, communities, and governments, for designing more flexible WII products, improving farmers’ financial literacy, and providing effective post-event support to enhance farmers’ resilience to climate change.

Suggested Citation

  • Qingxia Wang & Yim Soksophors & Khieng Phanna & Angelica Barlis & Shahbaz Mushtaq & Danny Rodulfo & Kees Swaans, 2023. "Do Farmers Demand Innovative Financial Products? A Case Study in Cambodia," JRFM, MDPI, vol. 16(8), pages 1-12, July.
    • Handle: RePEc:gam:jjrfmx:v:16:y:2023:i:8:p:353-:d:1203931
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    References listed on IDEAS

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    1. Rachel Croson & Uri Gneezy, 2009. "Gender Differences in Preferences," Journal of Economic Literature, American Economic Association, vol. 47(2), pages 448-474, June.
    2. Falco, Chiara & Rotondi, Valentina & Kong, Douch & Spelta, Valeria, 2021. "Investment, insurance and weather shocks: Evidence from Cambodia," Ecological Economics, Elsevier, vol. 188(C).
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    Cited by:

    1. Bungchay Lay & Isriya Bunyasiri & Ravissa Suchato, 2023. "Farmers’ Willingness to Purchase Weather Index Crop Insurance: Evidence from Battambang, Cambodia," JRFM, MDPI, vol. 16(12), pages 1-9, November.

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