Farmers' willingness to pay for digital and conventional credit: Insight from a discrete choice experiment in Madagascar.

In recent decades, microfinance institutions with financial products designed for low income groups have been established all over the world. However, credit access for farmers in developing countries remains low. Digital financial services are rapidly expanding globally at the moment. They also bea...

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Autores principales:	Yaw Sarfo, Oliver Musshoff, Ron Weber, Michael Danne
Formato:	article
Lenguaje:	EN
Publicado:	Public Library of Science (PLoS) 2021
Materias:	Medicine R Science Q
Acceso en línea:	https://doaj.org/article/c0802c0b7b9e4f548cac1e950c828d36
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spelling	oai:doaj.org-article:c0802c0b7b9e4f548cac1e950c828d362021-12-02T20:13:17ZFarmers' willingness to pay for digital and conventional credit: Insight from a discrete choice experiment in Madagascar.1932-620310.1371/journal.pone.0257909https://doaj.org/article/c0802c0b7b9e4f548cac1e950c828d362021-01-01T00:00:00Zhttps://doi.org/10.1371/journal.pone.0257909https://doaj.org/toc/1932-6203In recent decades, microfinance institutions with financial products designed for low income groups have been established all over the world. However, credit access for farmers in developing countries remains low. Digital financial services are rapidly expanding globally at the moment. They also bear great potential to address the credit needs of farmers in remote rural areas. Beyond mobile money services, digital credit is successively offered and also discussed in literature. Compared to conventional credit which is granted based on a thorough assessment of the loan applicant's financial situation, digital credit is granted based on an automated analysis of the existing data of the loan applicant. Despite the potential of digital credit for serving the credit needs of rural farmers, empirical research on farmers' willingness to pay for digital credit is non-existent. We employ a discrete choice experiment to compare farmers' willingness to pay for digital and conventional credit. We apply loan attributes which reflect typical characteristics of both credit products. Our results indicate a higher willingness to pay for digital credit compared to conventional credit. Furthermore, we find that the proximity to withdraw borrowed money has a higher effect on farmers' willingness to pay for digital credit compared to conventional credit. Furthermore, our results show that instalment repayment condition reduces farmers' willingness to pay for digital credit whilst increasing their willingness to pay for conventional credit. Additionally, we find that longer loan duration has a higher effect on farmers' willingness to pay for digital credit compared to conventional credit whereas higher additional credit cost has a lower effect on farmers' willingness to pay for conventional credit compared to digital credit. Our results highlight the potential of digital credit for agricultural finance in rural areas of Madagascar if a certain level of innovation is applied in designing digital credit products.Yaw SarfoOliver MusshoffRon WeberMichael DannePublic Library of Science (PLoS)articleMedicineRScienceQENPLoS ONE, Vol 16, Iss 11, p e0257909 (2021)
institution	DOAJ
collection	DOAJ
language	EN
topic	Medicine R Science Q
spellingShingle	Medicine R Science Q Yaw Sarfo Oliver Musshoff Ron Weber Michael Danne Farmers' willingness to pay for digital and conventional credit: Insight from a discrete choice experiment in Madagascar.
description	In recent decades, microfinance institutions with financial products designed for low income groups have been established all over the world. However, credit access for farmers in developing countries remains low. Digital financial services are rapidly expanding globally at the moment. They also bear great potential to address the credit needs of farmers in remote rural areas. Beyond mobile money services, digital credit is successively offered and also discussed in literature. Compared to conventional credit which is granted based on a thorough assessment of the loan applicant's financial situation, digital credit is granted based on an automated analysis of the existing data of the loan applicant. Despite the potential of digital credit for serving the credit needs of rural farmers, empirical research on farmers' willingness to pay for digital credit is non-existent. We employ a discrete choice experiment to compare farmers' willingness to pay for digital and conventional credit. We apply loan attributes which reflect typical characteristics of both credit products. Our results indicate a higher willingness to pay for digital credit compared to conventional credit. Furthermore, we find that the proximity to withdraw borrowed money has a higher effect on farmers' willingness to pay for digital credit compared to conventional credit. Furthermore, our results show that instalment repayment condition reduces farmers' willingness to pay for digital credit whilst increasing their willingness to pay for conventional credit. Additionally, we find that longer loan duration has a higher effect on farmers' willingness to pay for digital credit compared to conventional credit whereas higher additional credit cost has a lower effect on farmers' willingness to pay for conventional credit compared to digital credit. Our results highlight the potential of digital credit for agricultural finance in rural areas of Madagascar if a certain level of innovation is applied in designing digital credit products.
format	article
author	Yaw Sarfo Oliver Musshoff Ron Weber Michael Danne
author_facet	Yaw Sarfo Oliver Musshoff Ron Weber Michael Danne
author_sort	Yaw Sarfo
title	Farmers' willingness to pay for digital and conventional credit: Insight from a discrete choice experiment in Madagascar.
title_short	Farmers' willingness to pay for digital and conventional credit: Insight from a discrete choice experiment in Madagascar.
title_full	Farmers' willingness to pay for digital and conventional credit: Insight from a discrete choice experiment in Madagascar.
title_fullStr	Farmers' willingness to pay for digital and conventional credit: Insight from a discrete choice experiment in Madagascar.
title_full_unstemmed	Farmers' willingness to pay for digital and conventional credit: Insight from a discrete choice experiment in Madagascar.
title_sort	farmers' willingness to pay for digital and conventional credit: insight from a discrete choice experiment in madagascar.
publisher	Public Library of Science (PLoS)
publishDate	2021
url	https://doaj.org/article/c0802c0b7b9e4f548cac1e950c828d36
work_keys_str_mv	AT yawsarfo farmerswillingnesstopayfordigitalandconventionalcreditinsightfromadiscretechoiceexperimentinmadagascar AT olivermusshoff farmerswillingnesstopayfordigitalandconventionalcreditinsightfromadiscretechoiceexperimentinmadagascar AT ronweber farmerswillingnesstopayfordigitalandconventionalcreditinsightfromadiscretechoiceexperimentinmadagascar AT michaeldanne farmerswillingnesstopayfordigitalandconventionalcreditinsightfromadiscretechoiceexperimentinmadagascar
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Farmers' willingness to pay for digital and conventional credit: Insight from a discrete choice experiment in Madagascar.

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