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

Qingxia Wang (), Yim Soksophors, Khieng Phanna, Angelica Barlis, Shahbaz Mushtaq, Danny Rodulfo and Kees Swaans
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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

JRFM, 2023, vol. 16, issue 8, 1-12

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.

Keywords: climate change; innovative financial product; weather index insurance (WII); risk transfer (search for similar items in EconPapers)
JEL-codes: C E F2 F3 G (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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