Microfinance and Index Insurance : Testing Business Models in the Agricultural Sector
While access to credit is a key instrument toalleviate rural poverty, microfinance institutions(MFIs) are often unable to expand their agriculturelending portfolio. One of the key advantages for microfinance institutions to offer index insurance pr...
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| Language: | English en_US |
| Published: |
World Bank, Washington, DC
2017
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| Online Access: | http://documents.worldbank.org/curated/en/777531490707709588/Microfinance-and-index-insurance-testing-business-models-in-the-agricultural-sector http://hdl.handle.net/10986/26341 |
| Summary: | While access to credit is a key
instrument toalleviate rural poverty, microfinance
institutions(MFIs) are often unable to expand their
agriculturelending portfolio. One of the key advantages for
microfinance institutions to offer index insurance products
to their customersis to reduce the default risk on their
agriculture lending portfolio and therefore allow the
expansion of agriculture credit. Index-insurance can be sold
by microfinance institutions either on a mandatory or
voluntary basis.One of the key success factors of
credit-bundling is to offer a holistic solution to mitigate
agriculture risks. The second business model that
microfinance institutions have tested is to be direct
customers of index insurance. Portfolio insurance has the
potential to benefit farmers both ex-post (ex: restructuring
of loans, loans write-offs, offer of emergency loans) and
ex-ante (ex: larger supply of agriculture credit, reduced
agriculture lending interest rates). |
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