Discussion Papers 2023
CIRJE-F-1219 | "Shocks and Brave Farmers: Evidence from a Randomized Agricultural Microfinance Experiment in Bangladesh" |
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Author Name | Hossain, Md Amzad, Mohammad Abdul Malek, and Yasuyuki Sawada |
Date | August 2023 |
Full Paper | PDF file |
Remarks |
Abstract |
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In developing countries, insurance products against various climate and non-climaterelated shocks targeting farmers are still largely unavailable. We implement a largescale randomized experiment of a customized microcredit program for small farmers in Bangladesh to explore the role of credit as an insurance mechanism. We show that the program enhanced the resilience of tenant farmers to adverse shocks by facilitating greater credit utilization. This enabled farmers to be more independent in crop-farming activities, encouraged technology adoption, and increased income from crop-farming activities. These results highlight the effectiveness of expanding credit as a tool for institutions to support households susceptible to shocks. |
Keywords: Agricultural micro-credit, idiosyncratic and covariate shocks, insurance |