Barriers to Household Risk Management : Evidence from India

• Tác giả: Shawn Cole
• Ngôn ngữ: eng
• Ký hiệu phân loại: 181.4 *India
• Thông tin xuất bản: 2012
• Bộ sưu tập: Tài liệu truy cập mở
• ID: 232156
• Chủ đề: 1. ACCESS TO FINANCE; 2. ACCESS TO FINANCIAL SERVICES; 3. ADMINISTRATIVE DATA; 4. ADMINISTRATIVE RECORDS; 5. ADVERSE SELECTION

Tóm tắt

Why do many households remain exposed to large exogenous sources of non-systematic income risk? This paper uses a series of randomized field experiments in rural India to test the importance of price and non-price factors in the adoption of an innovative rainfall insurance product. The analysis finds that demand is significantly price-elastic, but that even if insurance were offered with payout ratios similar to US, widespread coverage would not be achieved. The paper identifies key non-price frictions that limit demand: liquidity constraints, particularly among poor households, lack of trust, and limited salience. The authors suggest potential improvements in contract design to mitigate these frictions.