Insured Loans and Credit Access: Evidence from a Randomized Field Experiment in Northern Ghana

Mishra, Khushbu; Gallenstein, Richard; Miranda, Mario J.; Sam, Abdoul G.; Toledo, Patricia; Mulangu, Francis

doi:10.1111/ajae.12136

Cited by 21 publications

(22 citation statements)

References 43 publications

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“…We find no additional positive effect of default‐income insurance. These results are surprising and conflict with Giné and Yang (2009), who find a negative impact of insurance on demand for credit, and other literature that finds no effect (Karlan et al., 2011; Mishra et al., 2019). We speculate that our experiment may be picking up an internal cost of default, a default aversion that may influence borrowing behavior but is difficult to detect in the randomized controlled trial framework employed elsewhere in the literature.…”

Section: Discussioncontrasting

confidence: 79%

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

Gallenstein

Flatnes

Dougherty

et al. 2021

Agricultural Economics

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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.

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Section: Discussioncontrasting

confidence: 79%

“…Karlan, Kutsoati, McMillan, and Udry (2011) and Mishra et al. (2019) find no impact of index insurance on credit demand, although Mishra et al. (2019) does find that when banks offer insured loans, farmers are more likely to obtain credit.…”

Section: Introductionmentioning

confidence: 99%

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

Gallenstein

Flatnes

Dougherty

et al. 2021

Agricultural Economics

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“…Still, the linking or bundling of credit with insurance is a topical issue at the present (Giné and Yang, 2009) because of the partial substitution of collateral for insurance (Shee and Turvey, 2012). For example, in a RCT in Ghana, Mishra et al. (2021) find that insured loans increase farmers' likelihood of receiving credit by between 15 and 21% points.…”

Section: Insurance Studies Related To Demand and Supplymentioning

confidence: 99%

“…Still, the linking or bundling of credit with insurance is a topical issue at the present (Gin e and Yang, 2009) because of the partial AFR 82,5 substitution of collateral for insurance (Shee and Turvey, 2012). For example, in a RCT in Ghana, Mishra et al (2021) find that insured loans increase farmers' likelihood of receiving credit by between 15 and 21% points. In a subexperiment to an RCT (see Ndegwa et al, 2020;Shee et al, 2021) conducted a DCE on both farmers and insurers in Kenya and found that while Kenyan farmers found bundling insurance a positive attribute of insurance, the insurance professionals viewed credit bundling as being either negative or not significant.…”

Section: Livestock Insurance In Rural Chinamentioning

confidence: 99%

The willingness to offer livestock insurance in rural China: a discrete choice experiment among Chinese insurance agents

Yang

Wen-jun

Turvey

2022

AFR

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Purpose This paper investigates Chinese agricultural insurance agents willingness to offer (WTO) livestock insurance based on the variations of eight main attributes of livestock insurance.Design/methodology/approach This study implements discrete choice experiments (DCE) with actual insurance agents who design, sell and operate livestock insurance in China. The choice experiment of this study is based on the D-optimal approach, a six-block design, with 15 cards per block and two choices per card. The sample size was 211. Econometrics results are based on conditional and mixed logit models.Findings The authors find that the subsidy effect is enormous; a one level increase of subsidy leads to 3.166 times higher probability to offer. This subsidy effect is important as it confirms the endogenous structure between price and quantity in insurance offering, where subsidy does not only incentivize demand but also the supply. Another main factor of insurance investigated is the impact of different coverage types on agents' WTO. The authors find that agents prefer mortality insurance the most, followed by revenue insurance and profit insurance, while Index-Based Livestock Insurance (IBLI) is the least preferred to offer. Agents' knowledge about these newer types of insurance supports their WTO as well; thus, proper education is necessary to promote the more advanced types of livestock insurance.Research limitations/implications A limitation is that in the presence of COVID 19, and administrative issues at the local level, the sample was not randomly drawn. Nonetheless, the authors believe that there is enough diversity across participants, insurers and provinces and have done sufficient robustness checks to support results and conclusions.Practical implications This study provides further validation for the DCE research method that could potentially be applied to different analyses: using choice experiments to study insurers and reveal their preferences, through combinations of various levels of core attributes for insurance products. The findings and contribution are critical to the reform and improvement of livestock insurance in China and for insurance markets more broadly. The authors find that insurers do not place equal weights or values on insurance product attributes and do not view types of insurance equally. In other words, while farmers may hold different preferences about the type of insurance they demand, the results suggest that insurers also hold preferences in the type of insurance they sell.Originality/value So far as the authors are aware, this is the first DCE designed around the supply of insurance products with the subjects being insurance agents, marketers and executives.

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“…These results have important policy implications. First, since learning by doing is important for continuity in adoption, policies should be in place to provide complimentary environments (e.g., insurance through safety net programs (Alem & Broussard, 2018) and through groups (Gallenstein, Mishra, Sam, & Miranda, 2019; Hill, Hoddinott, & Kumar, 2013; Mishra et al., 2020), and formal training (Takahashi et al., 2020) so that initial barriers to adoption are broken, especially for female‐headed households, making learning more effective for future periods. The reduction in learning gap can encourage stickiness to technology adoption in the later periods (Ma & Shi, 2015), boost the agricultural productivity (Abate et al., 2018; Khonje et al., 2018), and reduce malnutrition (Pan et al., 2018; Zeng et al., 2017) that is much needed in SSA.…”

Section: Conclusion and Policy Implicationsmentioning

confidence: 99%

Gender and the dynamics of technology adoption: Empirical evidence from a household‐level panel data

Mishra

Sam

Diiro

et al. 2020

Agricultural Economics

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Very few empirical studies account for the dynamic nature of the agricultural technology adoption decision and none of these explores if this dynamic nature depends on the gender of the decision maker. Using four waves of a householdlevel Ugandan panel data, this is the first empirical analysis to account for self-learning (one's own adoption experience) in explaining current adoption decision in a developing country context, and the first to study the interaction between self-learning and gender. Technology adoption is defined as adoption of hybrid seed, inorganic fertilizer, or pesticides. Our results indicate that the dynamic panel data Probit model is superior to its static counterpart in the sense that self-learning, captured by lagged technology adoption indicators, is by far the most important determinant of technology adoption. We also find a weaker impact of self-learning for female-headed households than male-headed households. Female-headed households face fewer learning opportunities, which produce a lower self-learning impact in later periods, further exacerbating the gap in technology adoption among male-and female-headed households.

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Insured Loans and Credit Access: Evidence from a Randomized Field Experiment in Northern Ghana

Cited by 21 publications

References 43 publications

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

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

The willingness to offer livestock insurance in rural China: a discrete choice experiment among Chinese insurance agents

Gender and the dynamics of technology adoption: Empirical evidence from a household‐level panel data

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