Cole, Shawn Allen
[Verfasser:in]
;
Giné, Xavier
[Sonstige Person, Familie und Körperschaft];
Vickery, James I.
[Sonstige Person, Familie und Körperschaft]
How Does Risk Management Influence Production Decisions? Evidence from a Field Experiment
Erschienen in:FRB of New York Staff Report ; No. 692
Umfang:
1 Online-Ressource (55 p)
Sprache:
Englisch
DOI:
10.2139/ssrn.2507978
Identifikator:
Entstehung:
Anmerkungen:
Nach Informationen von SSRN wurde die ursprüngliche Fassung des Dokuments September 1, 2014 erstellt
Beschreibung:
Weather is a key source of income risk, particularly in emerging market economies. This paper uses a randomized controlled trial involving a sample of Indian farmers to study how an innovative rainfall insurance product affects production decisions. We find that insurance provision induces farmers — particularly educated farmers — to shift production toward higher-return but higher-risk cash crops. Our results support the view that financial innovation can mitigate the real effects of uninsured production risk. Addressing the puzzle of low adoption, we show that payouts improve trust in the product and that farmers shield payouts from claims by relatives