Staff Publications

Staff Publications

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    'Staff publications' is the digital repository of Wageningen University & Research

    'Staff publications' contains references to publications authored by Wageningen University staff from 1976 onward.

    Publications authored by the staff of the Research Institutes are available from 1995 onwards.

    Full text documents are added when available. The database is updated daily and currently holds about 240,000 items, of which 72,000 in open access.

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Record number 552366
Title Liquidity constraints, informal institutions, and the adoption of weather insurance: A randomized controlled Trial in Ethiopia
Author(s) Belissa, Temesgen; Bulte, Erwin; Cecchi, Francesco; Gangopadhyay, Shubhashis; Lensink, Robert
Source Journal of Development Economics 140 (2019). - ISSN 0304-3878 - p. 269 - 278.
DOI https://doi.org/10.1016/j.jdeveco.2019.06.006
Department(s) Development Economics
WASS
Publication type Refereed Article in a scientific journal
Publication year 2019
Availibility Full text available from 2022-09-01
Abstract

We report the results of a drought insurance experiment in Ethiopia, and examine whether uptake of index-based insurance is enhanced if we allow farmers to pay after harvest (addressing a liquidity constraint). We also test to what extent uptake can be enhanced by promoting insurance via informal risk-sharing institutions (Iddirs), to reduce trust and information problems. The delayed payment insurance product increases uptake substantially when compared to standard insurance, from 8% to 24%, and leveraging informal institutions results in even greater uptake (43%). We also find suggestive evidence that the delayed premium product is indeed better at targeting the liquidity constrained. However, default rates associated with delayed payments are relatively high and concentrated in a small number of Iddirs – potentially compromising the economic viability of the novel product. We discuss how default rates can be reduced.

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