Does weather matter? How rainfall shocks affect credit risk in agricultural micro-finance

Small-scale farmers in developing countries are undersupplied with capital. Although microfinance institutions have become well established in developing countries, they have not significantly ex-tended their services to farmers. It is generally believed that this is partly due to the riskiness of lending to farmers. This paper combines original data from a Madagascan microfinance institution with weather data to estimate the effect of rainfall on the repayment performance of loans granted to farmers. Results estimated by linear probability models and a sequential logit model show that excessive rain in the harvest period increases the credit risk of loans granted to farmers


Issue Date:
2015
Publication Type:
Conference Paper/ Presentation
PURL Identifier:
http://purl.umn.edu/212617
Total Pages:
23




 Record created 2017-04-01, last modified 2017-08-22

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