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Locking Crops to Unlock Investment: Experimental Evidence on Warrantage in Burkina Faso

Clara Delavallade () and Susan Godlonton

No 9248, Policy Research Working Paper Series from The World Bank

Abstract: Financial market imperfections remain pervasive in developing countries, constraining potentially profitable investment decisions, especially for rural smallholder farmers. Warrantage is an innovative model of rural finance with the potential to overcome credit, storage, and commitment constraints through a localized inventory credit scheme. Exploiting random variations in household access to warrantage and intensity of access across villages, this paper studies the direct impact of this scheme on beneficiaries as well as its spillover effects. Take-up of storage is high (94 percent), while credit take-up is moderate (38 percent). Households with access to warrantage primarily store sorghum and maize and sell their production over an extended period of time, earning higher average prices and resulting in higher sales revenue ($248, or 33 percent, on average). Increased incomes are spent on long-term investments, including human capital expenditures (education), livestock purchases, and investment in agricultural inputs for the subsequent year.

Keywords: Crops and Crop Management Systems; Climate Change and Agriculture; Livestock and Animal Husbandry; Educational Sciences; Nutrition; Food Security (search for similar items in EconPapers)
Date: 2020-05-18
New Economics Papers: this item is included in nep-agr, nep-dev and nep-fdg
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