Skip navigation

Publications & Research

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

ACCESS TO FINANCE ACCESS TO FINANCING ACCOUNTING ACTUARIALLY FAIR INSURANCE AMOUNT OF LOAN APR ASSETS BANK LOAN BANK POLICY BANKING LAWS BANKS BORROWING BUSINESS ACTIVITY BUSINESS ASSOCIATION BUSINESS OWNER BUSINESS OWNERS BUSINESS RISK CAPITAL INVESTMENTS CAPITAL STOCK CASH FLOW CASH ON HAND CHECKS CONSUMERS CORRUPTION CREDIT OFFICER CURRENCY DEBT DEVELOPING COUNTRIES DEVELOPMENT ECONOMICS DISCOUNT RATE DUMMY VARIABLE ECONOMIC THEORY EDUCATION LEVELS ELIGIBILITY CRITERIA EMERGENCY LOAN EMPLOYEE EQUALITY EQUIPMENT EQUIPMENT PURCHASES EXCHANGE RATE FAIR PRICE FINANCIAL CRISIS FINANCIAL LITERACY FIRE INSURANCE FIRM PERFORMANCE GASOLINE PRICES GENDER GOVERNMENT SUBSIDIES GREATER ACCESS GROUP LOAN HEALTH INSURANCE HOUSEHOLD CONSUMPTION HOUSEHOLDS HUMAN CAPITAL INCOME INDIVIDUAL LOANS INFLATION INSTALLMENT INSTALLMENTS INSURANCE INSURANCE AGENCY INSURANCE COVERAGE INSURANCE MARKETS INSURANCE PAYMENTS INSURANCE PAYOUT INSURANCE PENETRATION INSURANCE POLICY INSURANCE PREMIUM INSURANCE PRODUCT INSURANCE PRODUCTS INSURANCE PROGRAM INSURANCE SERVICES INTEREST PAYMENT INTEREST RATE INTERNATIONAL BANK INVENTORIES INVENTORY INVESTING INVESTMENT ACTIVITIES INVESTMENT BEHAVIOR INVESTMENT CLIMATE INVESTMENT DECISIONS INVESTMENT OPPORTUNITIES LACK OF KNOWLEDGE LEGAL SYSTEM LIFE INSURANCE LIFE INSURANCE PREMIUMS LIQUIDITY LOAN LOAN AMOUNT LOAN AMOUNTS LOAN OFFICER LOAN OFFICERS LOAN PERIOD LOAN PRINCIPAL LOAN PROGRAM LOAN SIZE LOAN SIZES LONG-TERM INVESTMENTS MACROECONOMIC INSTABILITY MACROECONOMIC RISKS MACROECONOMIC UNCERTAINTY MARGINAL COEFFICIENTS MARKET PRICES MEDIAN FIRM MFIS MICROENTERPRISES MICROFINANCE MICROFINANCE INSTITUTION MICROFINANCE INSTITUTIONS MICROFINANCE LOAN MICROFINANCE LOANS NEED FOR CREDIT NEGOTIATIONS NEW MARKET POLICY ANALYSIS POLITICAL RISK POLITICAL RISKS POLITICAL UNCERTAINTY PORTFOLIOS PRINCIPAL PAYMENT PROFITABILITY PUBLIC POLICY REFERENDUM REGULATORY CONSTRAINTS REGULATORY POLICY REPAYMENT RESERVES RETURN RETURNS RISK AVERSION RISK MANAGEMENT RISK OF DEFAULTS RISK SHARING SAVINGS SET ASIDE SMALL BUSINESS SMALL BUSINESS OWNERS SMALL ENTERPRISES SOCIAL FUND SOURCES OF FINANCE STOCK EXCHANGE STOCK MARKET SUBSISTENCE FARMERS SUBSTITUTION TAX TAX RATES TELECOMMUNICATIONS TRUST FUNDS VILLAGES WEATHER INSURANCE WORKING CAPITAL
76
0

Attachments [ 0 ]

There are no files associated with this item.

More Details

World Bank Group, Washington, DC
Middle East and North Africa | Egypt, Arab Republic of
2014-10-06T20:17:18Z | 2014-10-06T20:17:18Z | 2014-09

Firms in many developing countries cite macroeconomic instability and political uncertainty as major constraints to their growth. Economic theory suggests uncertainty can cause firms to delay investments until uncertainty is resolved. A randomized experiment was conducted in post-revolution Egypt to measure the impact of insuring microenterprises against macroeconomic and political uncertainty. Demand for macroeconomic shock insurance was high; 36.7 percent of microentrepreneurs in the treatment group purchased insurance. However, purchasing insurance does not change the likelihood that a business takes a new loan, the size of the loan, or how the loan is invested. This lack of effect is attributed to microenterprises largely investing in inventories and raw materials rather than irreversible investments like equipment. These results suggest that, contrary to what some firms profess, macroeconomic and political risk is not inhibiting the investment behavior of microenterprises. However, insurance may still be of value to help firms cope with shocks when they do occur, but the paper is unable to examine this dimension, because the insurance product did not pay out over the course of the pilot.

Comments

(Leave your comments here about this item.)

Item Analytics

Select desired time period