In Ghana, insured loans increased farmers' likelihood of receiving credit by between 15 and 21 percentage points. There was no impact on the likelihood that farmers apply for credit but there was an increase in the likelihood of loan approvals of between 17 and 25 percentage points.
This study from Ghana found that index insurance lowers overall demand for agricultural loans while farmers appear to prefer micro-level insurance over meso‐level insurance. The study also shows that farmers are willing to pay to avoid basis risk.
Increasing agricultural efficiency via technology adoption remains a high priority among development practitioners. One potential tool for furthering this objective is using drought index insurance to increase access to credit.
This presentation took place in University of California Davis, United States describing a three-year research project promoting smallholders to purchase index insurance contracts via coupled credit in Ghana.