Does weather matter? How rainfall shocks affect credit risk in agricultural micro-finance

Niels Pelka, Ron Weber and Oliver Musshoff

No 212617, 2015 Conference, August 9-14, 2015, Milan, Italy from International Association of Agricultural Economists

Abstract: Small-scale farmers in developing countries are undersupplied with capital. Although microfinance institutions have become well established in developing countries, they have not significantly ex-tended their services to farmers. It is generally believed that this is partly due to the riskiness of lending to farmers. This paper combines original data from a Madagascan microfinance institution with weather data to estimate the effect of rainfall on the repayment performance of loans granted to farmers. Results estimated by linear probability models and a sequential logit model show that excessive rain in the harvest period increases the credit risk of loans granted to farmers

Keywords: Agricultural Finance; Environmental Economics and Policy (search for similar items in EconPapers)
Pages: 23
Date: 2015
New Economics Papers: this item is included in nep-dcm, nep-dev, nep-mfd and nep-rmg
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Citations: View citations in EconPapers (10)

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Persistent link: https://EconPapers.repec.org/RePEc:ags:iaae15:212617

DOI: 10.22004/ag.econ.212617

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