Does weather risk explain low uptake of agricultural credit? Evidence from Ethiopia
Credit markets are key instruments by which liquidity constrained smallholder farmers may finance productivity investments. However, the documented low demand and uptake of agricultural credit by smallholder farmers in sub-Saharan Africa poses challenges for energizing rural transformation in the re...
| Autores principales: | , , , |
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| Formato: | Artículo preliminar |
| Lenguaje: | Inglés |
| Publicado: |
International Food Policy Research Institute
2018
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| Materias: | |
| Acceso en línea: | https://hdl.handle.net/10568/146802 |
| _version_ | 1855526490227081216 |
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| author | Abay, Kibrom A. Koru, Bethlehem Chamberlin, Jordan Berhane, Guush |
| author_browse | Abay, Kibrom A. Berhane, Guush Chamberlin, Jordan Koru, Bethlehem |
| author_facet | Abay, Kibrom A. Koru, Bethlehem Chamberlin, Jordan Berhane, Guush |
| author_sort | Abay, Kibrom A. |
| collection | Repository of Agricultural Research Outputs (CGSpace) |
| description | Credit markets are key instruments by which liquidity constrained smallholder farmers may finance productivity investments. However, the documented low demand and uptake of agricultural credit by smallholder farmers in sub-Saharan Africa poses challenges for energizing rural transformation in the region. In this paper we investigate the impact of rainfall uncertainty (and risk more generally) on the expressed demand for credit among rural households in Ethiopia. We explore potential mechanisms through which weather risk may explain the low demand for credit. We also examine the consequences of uninsured rainfall uncertainty on productivity-enhancing and loss-reducing agricultural investments. We provide evidence that rainfall uncertainty dampens households’ demand for agricultural credit. Rainfall uncertainty is associated with credit risk-rationing, which underlies the low demand for agricultural credit in Ethiopia. We also show that rainfall uncertainty helps to explain the low uptake of productivity-enhancing agricultural technologies, such as fertilizers. On the other hand, rainfall uncertainty encourages investments in defensive agricultural inputs, such as pesticides, herbicides, and fungicides. Our results highlight the impacts of uninsured production risk on agricultural investments made by African smallholders. |
| format | Artículo preliminar |
| id | CGSpace146802 |
| institution | CGIAR Consortium |
| language | Inglés |
| publishDate | 2018 |
| publishDateRange | 2018 |
| publishDateSort | 2018 |
| publisher | International Food Policy Research Institute |
| publisherStr | International Food Policy Research Institute |
| record_format | dspace |
| spelling | CGSpace1468022025-11-06T06:20:52Z Does weather risk explain low uptake of agricultural credit? Evidence from Ethiopia Abay, Kibrom A. Koru, Bethlehem Chamberlin, Jordan Berhane, Guush investment agricultural credit smallholders risk credit finance credit control Credit markets are key instruments by which liquidity constrained smallholder farmers may finance productivity investments. However, the documented low demand and uptake of agricultural credit by smallholder farmers in sub-Saharan Africa poses challenges for energizing rural transformation in the region. In this paper we investigate the impact of rainfall uncertainty (and risk more generally) on the expressed demand for credit among rural households in Ethiopia. We explore potential mechanisms through which weather risk may explain the low demand for credit. We also examine the consequences of uninsured rainfall uncertainty on productivity-enhancing and loss-reducing agricultural investments. We provide evidence that rainfall uncertainty dampens households’ demand for agricultural credit. Rainfall uncertainty is associated with credit risk-rationing, which underlies the low demand for agricultural credit in Ethiopia. We also show that rainfall uncertainty helps to explain the low uptake of productivity-enhancing agricultural technologies, such as fertilizers. On the other hand, rainfall uncertainty encourages investments in defensive agricultural inputs, such as pesticides, herbicides, and fungicides. Our results highlight the impacts of uninsured production risk on agricultural investments made by African smallholders. 2018-12-12 2024-06-21T09:08:49Z 2024-06-21T09:08:49Z Working Paper https://hdl.handle.net/10568/146802 en https://doi.org/10.1093/erae/jbab013 Open Access application/pdf International Food Policy Research Institute Ethiopian Development Research Institute Abay, Kibrom A.; Koru, Bethlehem; Chamberlin, Jordan; and Berhane, Guush. 2018. Does weather risk explain low uptake of agricultural credit? Evidence from Ethiopia. ESSP Working Paper 128. Washington, DC and Addis Ababa, Ethiopia: International Food Policy Research Institute (IFPRI) and Ethiopian Development Research Institute (EDRI). https://hdl.handle.net/10568/146802 |
| spellingShingle | investment agricultural credit smallholders risk credit finance credit control Abay, Kibrom A. Koru, Bethlehem Chamberlin, Jordan Berhane, Guush Does weather risk explain low uptake of agricultural credit? Evidence from Ethiopia |
| title | Does weather risk explain low uptake of agricultural credit? Evidence from Ethiopia |
| title_full | Does weather risk explain low uptake of agricultural credit? Evidence from Ethiopia |
| title_fullStr | Does weather risk explain low uptake of agricultural credit? Evidence from Ethiopia |
| title_full_unstemmed | Does weather risk explain low uptake of agricultural credit? Evidence from Ethiopia |
| title_short | Does weather risk explain low uptake of agricultural credit? Evidence from Ethiopia |
| title_sort | does weather risk explain low uptake of agricultural credit evidence from ethiopia |
| topic | investment agricultural credit smallholders risk credit finance credit control |
| url | https://hdl.handle.net/10568/146802 |
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