Macroinsurance for Microenterprises : A Randomized Experiment in Post-Revolution Egypt

Firms in many developing countries cite macroeconomic instability and political uncertainty as major constraints to their growth. We conduct a randomized experiment in post-revolution Egypt to measure the impact of insuring microenterprises against this uncertainty. Demand for macroeconomic shock in...

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Bibliographic Details
Main Authors:	Groh, Matthew, McKenzie, David
Format:	Journal Article
Language:	en_US
Published:	Elsevier 2015
Subjects:	microenterprises uncertainty risk insurance political stability
Online Access:	http://hdl.handle.net/10986/22718

id	okr-10986-22718
recordtype	oai_dc
spelling	okr-10986-227182021-04-23T14:04:10Z Macroinsurance for Microenterprises : A Randomized Experiment in Post-Revolution Egypt Groh, Matthew McKenzie, David microenterprises uncertainty risk insurance political stability Firms in many developing countries cite macroeconomic instability and political uncertainty as major constraints to their growth. We conduct a randomized experiment in post-revolution Egypt to measure the impact of insuring microenterprises against this uncertainty. Demand for macroeconomic shock insurance was high, with a take-up rate of 36.7 percent. However, purchasing insurance does not change the likelihood a business takes a new loan, the size of the loan, or how they invest this loan. We attribute this lack of effect to microenterprises largely investing in inventories and raw materials rather than irreversible investments like equipment, suggesting that macroeconomic and political risk is not inhibiting their investment behavior. The challenges of introducing an innovative insurance product in an environment where microentrepreneurs had little previous insurance exposure are particularly evident in a second year, where take-up was extremely low following political events that came close to, but did not, trigger insurance pay-outs. 2015-10-01T20:46:58Z 2015-10-01T20:46:58Z 2015-08-24 Journal Article Journal of Development Economics 0304-3878 http://hdl.handle.net/10986/22718 en_US CC BY-NC-ND 3.0 IGO http://creativecommons.org/licenses/by-nc-nd/3.0/igo/ World Bank Elsevier Publications & Research Publications & Research :: Journal Article Egypt, Arab Republic of
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	en_US
topic	microenterprises uncertainty risk insurance political stability
spellingShingle	microenterprises uncertainty risk insurance political stability Groh, Matthew McKenzie, David Macroinsurance for Microenterprises : A Randomized Experiment in Post-Revolution Egypt
geographic_facet	Egypt, Arab Republic of
description	Firms in many developing countries cite macroeconomic instability and political uncertainty as major constraints to their growth. We conduct a randomized experiment in post-revolution Egypt to measure the impact of insuring microenterprises against this uncertainty. Demand for macroeconomic shock insurance was high, with a take-up rate of 36.7 percent. However, purchasing insurance does not change the likelihood a business takes a new loan, the size of the loan, or how they invest this loan. We attribute this lack of effect to microenterprises largely investing in inventories and raw materials rather than irreversible investments like equipment, suggesting that macroeconomic and political risk is not inhibiting their investment behavior. The challenges of introducing an innovative insurance product in an environment where microentrepreneurs had little previous insurance exposure are particularly evident in a second year, where take-up was extremely low following political events that came close to, but did not, trigger insurance pay-outs.
format	Journal Article
author	Groh, Matthew McKenzie, David
author_facet	Groh, Matthew McKenzie, David
author_sort	Groh, Matthew
title	Macroinsurance for Microenterprises : A Randomized Experiment in Post-Revolution Egypt
title_short	Macroinsurance for Microenterprises : A Randomized Experiment in Post-Revolution Egypt
title_full	Macroinsurance for Microenterprises : A Randomized Experiment in Post-Revolution Egypt
title_fullStr	Macroinsurance for Microenterprises : A Randomized Experiment in Post-Revolution Egypt
title_full_unstemmed	Macroinsurance for Microenterprises : A Randomized Experiment in Post-Revolution Egypt
title_sort	macroinsurance for microenterprises : a randomized experiment in post-revolution egypt
publisher	Elsevier
publishDate	2015
url	http://hdl.handle.net/10986/22718
_version_	1764452060701392896

Macroinsurance for Microenterprises : A Randomized Experiment in Post-Revolution Egypt

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