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Parametric insurance and technology adoption in developing countries

Author

Listed:
  • Enrico Biffis

    (Imperial College Business School)

  • Erik Chavez

    (Imperial College Business School)

  • Alexis Louaas

    (CREST, Ecole Polytechnique)

  • Pierre Picard

    (CREST, Ecole Polytechnique)

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 parametric 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.

Suggested Citation

  • Enrico Biffis & Erik Chavez & Alexis Louaas & Pierre Picard, 2022. "Parametric insurance and technology adoption in developing countries," The Geneva Risk and Insurance Review, Palgrave Macmillan;International Association for the Study of Insurance Economics (The Geneva Association), vol. 47(1), pages 7-44, March.
    • Handle: RePEc:pal:genrir:v:47:y:2022:i:1:d:10.1057_s10713-020-00061-0
    DOI: 10.1057/s10713-020-00061-0
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    Cited by:

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    2. Linwei Wang & Yixin Hu & Rong Kong, 2023. "The Impact of Bancassurance Interaction on the Adoption Behavior of Green Production Technology in Family Farms: Evidence from China," Land, MDPI, vol. 12(5), pages 1-26, April.

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    More about this item

    Keywords

    Parametric insurance; Crop insurance; Moral hazard; Credit rationing; Technology adoption;
    All these keywords.

    JEL classification:

    • G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies; Actuarial Studies
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • Q14 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Finance

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