Risk aversion and credit access: Solving financial exclusion through contract innovation

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dc.creatorAmbler, Kate
dc.creatorBakhtiar, M. Mehrab
dc.creatorde Brauw, Alan
dc.creatorUddin, Mohammad Riad
dc.date2026-02-17
dc.date2026-02-17T20:17:43Z
dc.date2026-02-17T20:17:43Z
dc.date.accessioned2026-06-27T15:17:10Z
dc.descriptionCredit market failures may reflect voluntary withdrawal by risk-averse borrowers in addition to supply-side constraints. We conduct a randomized trial with 1,517 Bangladeshi households, offering cattle financing through conventional loans or profit-sharing contracts that spread risk between the farmer and the financial partner. Overall, interest in and take-up of the profit-sharing contracts were modestly higher than the conventional loans. However, conventional loan take-up was much lower among risk-averse farmers, and profit-sharing eliminated the take-up gap between risk-averse and non-risk-averse farmers. We find that it is male risk preferences that are associated with these decisions even when contracts explicitly target women. Livestock investment increases under both contracts with no evidence of moral hazard under profit-sharing.
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dc.identifierhttps://hdl.handle.net/10568/181679
dc.identifier.urihttp://hdl.handle.net/123456789/99964
dc.languageen
dc.publisherInternational Food Policy Research Institute
dc.relationhttps://hdl.handle.net/10568/178890
dc.relationhttps://hdl.handle.net/10568/168422
dc.relationhttps://doi.org/10.2499/p15738coll2.137043
dc.relationhttps://www.ifpri.org/blog/four-lessons-for-financial-innovation-in-agrifood-systems/
dc.rightsOpen Access
dc.sourceAmbler, Kate; Bakhtiar, M. Mehrab; de Brauw, Alan; and Uddian, Mohammad Riad. 2026. Risk aversion and credit access: Solving financial exclusion through contract innovation. IFPRI Discussion Paper 2405. Washington, DC: International Food Policy Research Institute. https://hdl.handle.net/10568/181679
dc.subjectgender
dc.subjectcredit
dc.subjectfinancing
dc.subjectlivestock
dc.subjectloans
dc.subjectsmallholders
dc.subjectfinancial innovation
dc.subjectaccess to finance
dc.subjectrisk
dc.subjectrisk coping strategies
dc.titleRisk aversion and credit access: Solving financial exclusion through contract innovation
dc.typeWorking Paper

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Instituto Internacional de Investigación sobre Políticas Alimentarias (IFPRI)