You are Approved! Insured Loans Improve Credit Access and Technology Adoption of Ghanaian Farmers.

Increasing agricultural efficiency via technology adoption is high-priority among development practitioners. One potential tool for furthering this objective is using drought index insurance to increase access to credit. Accordingly, the objective of this paper is to investigate whether coupling agricultural loans with micro-level and meso-level drought index insurance can stimulate the demand and supply of credit and increase technology adoption. To this end, in partnership with 14 rural banks and the Ghana Agricultural Insurance Pool, we implemented a randomized control trial in northern Ghana that targeted maize farmers organized in credit groups. Our empirical analysis indicates that on the demand side, coupling loans with micro-insurance increases the likelihood of loan application for female farmers, potentially because of the payouts being directly made to them and a lack of trust in the bank. In contrast, coupling loans with meso-insurance increases the likelihood of loan application for those farmers who place the highest trust in the bank. On the supply side, coupling loans with meso-insurance increases the likelihood of loan approval, but with a larger impact for males. Overall, our results indicate that insured loans hold significant promise for expanding credit access and technology adoption among smallholder farmers. Acknowledgement : This research was partly funded by a USAID/BASIS grant. We are grateful to the participants in the 2015 BASIS technical Meeting at UC Berkley and the PhD Seminar in Agricultural, Environmental, and Department Economics at the Ohio State University for their feedback. The usual disclaimer applies.

Issue Date:
Publication Type:
Conference Paper/ Presentation
DOI and Other Identifiers:
Record Identifier:
JEL Codes:
Q14; D90

 Record created 2018-10-02, last modified 2020-10-28

Download fulltext

Rate this document:

Rate this document:
(Not yet reviewed)