Does bundling credit with index insurance boost agricultural technology adoption? Evidence from Ghana

The adoption of advanced agricultural technologies in Sub-Saharan Africa remains disappointingly low, particularly among the millions of poor smallholders who account for most of the agricultural production. We conducted a randomized control trial in Ghana to assess the impact of easing drought-risk constraints in the agricultural credit market, by bundling joint liability agricultural loans with index insurance, on smallholder farmers’ agricultural technology adoption decisions. In the micro-insurance treatment, any index insurance payouts go directly to farmers, while in the meso-insurance treatment, payouts are issued to banks to be used to expunge farmers’ debts. We find evidence that bundling joint liability lending with micro-insurance increases adoption of fertilizer.