The Role of Risk-Contingent Credit in Improving Access to Inputs, Productivity and Efficiency of Smallholder Wheat and Teff Producers in Ethiopia

As part of a large project entitled "Promoting Resilience and Food Security through Risk-Contingent Credit in Africa", we are using an RCT to examine how intensive training on risk perception, agronomic practices and intensive financial education interventions (nudges) can improve the quality of credit decision-making and welfare of farmers in Ethiopia, when such farmers misunderstand the consequences of their credit choices. The experiment starts a game role playing with the farmers, offering them to decide to choose from alternative farm choices involving no credit, traditional credit and risk-contingent credit. Then, the main intervention provides farmers with vouchers to be redeemed for acquisition of fertilizer, seeds and chemicals all which are insured. Using this design, we aim to understand the role of the risk-contingent credit in enhancing investment risk-taking behavior as well as access to inputs for smallholder farmers with implications for productivity, efficiency and welfare in Ethiopia.