Evaluating the gendered credit constraints and uptake of an insurance-linked credit product

Smallholder farmers in low- and medium-income countries lack sufficient access to agricultural production credit that can help them adopt new technologies and improve their farm production. Compared to men, women smallholder farmers face additional social, and economic barriers that further limit their credit access. Bundling agricultural credit with insurance, or risk contingent credit (RCC), provides a mechanism for addressing some of the credit access constraints and reducing credit rationing among smallholder farmers. In this paper, we evaluate the gendered determinants of credit rationing and the gender differences of the effects of RCC innovation on credit uptake decisions. We use three-wave panel data from a randomized control trial (RCT) in Kenya. We find that female-headed households (FHH) are significantly more risk rationed (or demand-side credit constrained) compared to male-headed households (MHH), however, the gender of the household head does not significantly determine the household quantity rationing status (supply-side constrained). We also find that farmers randomly assigned to be offered the RCC are up to four percent more likely to take up credit. RCC’s impacts on credit uptake decisions do not vary with the gender of the household head, however, RCC has a differential positive and significant impact on the credit uptake decisions of farmers that were previously (at baseline) risk rationed. Based on these findings, we suggest that policies should focus on reducing gendered demand-side barriers to credit access, especially among poorer women households. Climate financing innovations such as RCC should also be designed and delivered in a gender-inclusive manner to accommodate women farmers who face time, liquidity, and financial literacy barriers.