Mind the Gap - University of California, Davis · Mind the Gap Workshop Christopher Udry, Yale...

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Mind the Gap Workshop Christopher Udry, Yale University October 2016

Transcript of Mind the Gap - University of California, Davis · Mind the Gap Workshop Christopher Udry, Yale...

Page 1: Mind the Gap - University of California, Davis · Mind the Gap Workshop Christopher Udry, Yale University October 2016. Is the gap real? • We’ve all seen this: • Input intensity

MindtheGapWorkshopChristopherUdry,YaleUniversity

October2016

Page 2: Mind the Gap - University of California, Davis · Mind the Gap Workshop Christopher Udry, Yale University October 2016. Is the gap real? • We’ve all seen this: • Input intensity

Isthegapreal?

• We’veallseenthis:

Page 3: Mind the Gap - University of California, Davis · Mind the Gap Workshop Christopher Udry, Yale University October 2016. Is the gap real? • We’ve all seen this: • Input intensity

• Inputintensityislow

Page 4: Mind the Gap - University of California, Davis · Mind the Gap Workshop Christopher Udry, Yale University October 2016. Is the gap real? • We’ve all seen this: • Input intensity

• Productivityislowrelativetotherestoftheeconomy

• Butwe’lldiscussthismorethoroughlylaterthismorning

Page 5: Mind the Gap - University of California, Davis · Mind the Gap Workshop Christopher Udry, Yale University October 2016. Is the gap real? • We’ve all seen this: • Input intensity

Whataretheprimarybarrierstoadoptionofnewtechnologiesandtointensification?

Financialdimensions• Opportunitycostofcapital• Liquidityconstraints• Risk

Page 6: Mind the Gap - University of California, Davis · Mind the Gap Workshop Christopher Udry, Yale University October 2016. Is the gap real? • We’ve all seen this: • Input intensity

• Opportunitycostofcapital

Page 7: Mind the Gap - University of California, Davis · Mind the Gap Workshop Christopher Udry, Yale University October 2016. Is the gap real? • We’ve all seen this: • Input intensity

• Liquidityconstraints• Inflexibility,inabilitytoraisefundstotakeadvantageofopportunities,thetimingofaccesstoresources

Page 8: Mind the Gap - University of California, Davis · Mind the Gap Workshop Christopher Udry, Yale University October 2016. Is the gap real? • We’ve all seen this: • Input intensity

• Risk

Page 9: Mind the Gap - University of California, Davis · Mind the Gap Workshop Christopher Udry, Yale University October 2016. Is the gap real? • We’ve all seen this: • Input intensity

ConstraintsandFinancialInnovation

Constraints Instruments Evidence

Returns

Liquidity

Risk

Page 10: Mind the Gap - University of California, Davis · Mind the Gap Workshop Christopher Udry, Yale University October 2016. Is the gap real? • We’ve all seen this: • Input intensity

ConstraintsandFinancialInnovation

Constraints Instruments Evidence

Returns Credit

Liquidity

Risk

Page 11: Mind the Gap - University of California, Davis · Mind the Gap Workshop Christopher Udry, Yale University October 2016. Is the gap real? • We’ve all seen this: • Input intensity

ConstraintsandFinancialInnovation

Constraints Instruments Evidence

Returns Credit

Liquidity Savings

Risk

Page 12: Mind the Gap - University of California, Davis · Mind the Gap Workshop Christopher Udry, Yale University October 2016. Is the gap real? • We’ve all seen this: • Input intensity

ConstraintsandFinancialInnovation

Constraints Instruments Evidence

Returns Credit

Liquidity Savings

Risk Insurance

Page 13: Mind the Gap - University of California, Davis · Mind the Gap Workshop Christopher Udry, Yale University October 2016. Is the gap real? • We’ve all seen this: • Input intensity

SuccessfulAgriculturalLending

• ….israre• Mali:Soro Yiriwaso• Agriculturalloanstowomenfarmers• Individualloanswithgroupliability• 25%annualinterest+3%fees+10%requiredsaving• $110-120/woman• Avg inputexpenses$200• Householdgrossoutput$520• Nodefaultover2years

Page 14: Mind the Gap - University of California, Davis · Mind the Gap Workshop Christopher Udry, Yale University October 2016. Is the gap real? • We’ve all seen this: • Input intensity

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ImpactofAccesstoBorrowingonOutput

Page 15: Mind the Gap - University of California, Davis · Mind the Gap Workshop Christopher Udry, Yale University October 2016. Is the gap real? • We’ve all seen this: • Input intensity

ConstraintsandFinancialInnovation

Constraints Instruments Evidence

Returns Credit Mali: onaveragebinding,butvarieslocally

Liquidity Savings

Risk Insurance

Page 16: Mind the Gap - University of California, Davis · Mind the Gap Workshop Christopher Udry, Yale University October 2016. Is the gap real? • We’ve all seen this: • Input intensity

VillageSavingsandLoanAssociation(VSLA)

• Basic Design:o Around15-30memberswhomeetweekly(mostlywomen)

o Ateachmeetingmembersmakesavingscontributions(commitment)

o Memberscantakeloansandrepaywithinteresto Atendof10-12monthcycle,fundissharedouto Emergencyfund

• FocushereisonGhana,Malawi,andUganda• Sampleof15,000householdsin950villages• Implementationperiod:22-30months

• Developed in the early 1990s in Mali by CARE• Aims to improve on the ROSCA model

Page 17: Mind the Gap - University of California, Davis · Mind the Gap Workshop Christopher Udry, Yale University October 2016. Is the gap real? • We’ve all seen this: • Input intensity

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VSLA

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rought

Baseline

VSLA

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rought

FoodSecurity Income

Changefrom

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Baselinevalue=0

VSLAinUgandaandMalawiinDroughtandnon-DroughtConditions

Page 18: Mind the Gap - University of California, Davis · Mind the Gap Workshop Christopher Udry, Yale University October 2016. Is the gap real? • We’ve all seen this: • Input intensity

ConstraintsandFinancialInnovation

Constraints Instruments Evidence

Returns Credit Mali: onaveragebinding,butvarieslocally

Liquidity Savings UgandaandMali:resilienceindrought

Risk Insurance

Page 19: Mind the Gap - University of California, Davis · Mind the Gap Workshop Christopher Udry, Yale University October 2016. Is the gap real? • We’ve all seen this: • Input intensity

RainfallIndexInsurance

• 2008-2012,84Communities,1,406Households• Insurance:grants+subsidizedsales(Actuarialvalue8-9.5cedis/acre,averageof$40)• Cashgrants($85/acre)• Insuranceagainstdroughtandflood

Page 20: Mind the Gap - University of California, Davis · Mind the Gap Workshop Christopher Udry, Yale University October 2016. Is the gap real? • We’ve all seen this: • Input intensity
Page 21: Mind the Gap - University of California, Davis · Mind the Gap Workshop Christopher Udry, Yale University October 2016. Is the gap real? • We’ve all seen this: • Input intensity

ConstraintsandFinancialInnovation

Constraints Instruments Evidence

Returns Credit Mali: onaveragebinding,butvarieslocally

Liquidity Savings UgandaandMali:resilienceindrought

Risk Insurance Ghana:strongimpactoninvestment,butvariesovertime

Page 22: Mind the Gap - University of California, Davis · Mind the Gap Workshop Christopher Udry, Yale University October 2016. Is the gap real? • We’ve all seen this: • Input intensity

Financialconstraintsandmissedopportunities

• Imperfectcreditmarkets• Wide-rangingevidence;fewcounter-examples• Successfulagriculturalcreditmarketinterventionsrare

• Constraintsonsaving• Growingevidence,butvaryingresults• Tiesintobehavioralliterature

• Incompleteinsurance• Evidenceverystrongagainstfullinsurance• Centralityforinvestmentchoicelessclear• Indexinsuranceproductsremainproblematic

• Investmentreturns?


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