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Parametric insurance and technology adoption in developing countries

Enrico Biffis (), Erik Chavez (), Alexis Louaas and Pierre Picard ()
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Enrico Biffis: Imperial College London
Erik Chavez: Imperial College London
Alexis Louaas: CREST - Centre de Recherche en Économie et Statistique - ENSAI - Ecole Nationale de la Statistique et de l'Analyse de l'Information [Bruz] - CNRS - Centre National de la Recherche Scientifique - X - École polytechnique - ENSAE ParisTech - École Nationale de la Statistique et de l'Administration Économique

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Abstract: Technology adoption is crucial for the development of low income countries. This paper investigates how parametric insurance can contribute to improving access to finance, and hence to technology, for smallholder farmers. In a model with moral hazard, we show that bundling para-metric insurance with loans may lower collateral requirements, thus promoting the financial inclusion of poor households. The case of agricultural input loans and weather-index insurance is studied in detail and related to bundled finance solutions recently piloted among smallholder farmers in Tanzania.

Date: 2020-06-19
New Economics Papers: this item is included in nep-agr, nep-fdg, nep-fle and nep-ias
Note: View the original document on HAL open archive server: https://hal.archives-ouvertes.fr/hal-02875530
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