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Patterns of Rainfall Insurance Participation in Rural India / Gine, Xavier
World Bank Open Knowledge Repository (formerly "World Bank E-Library Publications") Available online
View online- Format:
- Book
- Government document
- Author/Creator:
- Gine, Xavier
- Series:
- Policy research working papers.
- World Bank e-Library.
- Language:
- English
- Subjects (All):
- Accounting.
- Banks and Banking Reform.
- Debt Markets.
- Federal Reserve Bank of New York.
- Finance and Financial Sector Development.
- Fixed Costs.
- Insurance.
- Insurance and Risk Mitigation.
- Labor Policies.
- Liquid Assets.
- Local Financial Institutions.
- Microfinance.
- Moral Hazard.
- Poverty Reduction.
- Rural Development.
- Rural Poverty Reduction.
- Savings.
- Social Protections and Labor.
- Technical Assistance.
- Local Subjects:
- Accounting.
- Banks and Banking Reform.
- Debt Markets.
- Federal Reserve Bank of New York.
- Finance and Financial Sector Development.
- Fixed Costs.
- Insurance.
- Insurance and Risk Mitigation.
- Labor Policies.
- Liquid Assets.
- Local Financial Institutions.
- Microfinance.
- Moral Hazard.
- Poverty Reduction.
- Rural Development.
- Rural Poverty Reduction.
- Savings.
- Social Protections and Labor.
- Technical Assistance.
- Physical Description:
- 1 online resource (44 pages)
- Place of Publication:
- Washington, D.C., The World Bank, 2007
- System Details:
- data file
- Summary:
- This paper describes the contract design and institutional features of an innovative rainfall insurance policy offered to smallholder farmers in rural India, and presents preliminary evidence on the determinants of insurance participation. Insurance takeup is found to be decreasing in basis risk between insurance payouts and income fluctuations, increasing in household wealth and decreasing in the extent to which credit constraints bind. These results match with predictions of a simple neoclassical model appended with borrowing constraints. Other patterns are less consistent with the "benchmark" model; namely, participation in village networks and measures of familiarity with the insurance vendor are strongly correlated with insurance takeup decisions, and risk-averse households are found to be less, not more, likely to purchase insurance. We suggest that these results reflect household uncertainty about the product itself, given their limited experience with it.
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