Risk Sharing versus Low‐Cost Credit Systems for International Development

Abstract

Abstract Low‐cost credit programs in developing countries have failed to achieve agricultural technology adoption goals. This research attributes the failure to the inability of poor farmers to bear the combined business and financial risks posed by adopting new technologies and develops proposals for the design of credit programs that reduce these risks. Agronomic and socioeconomic data are combined through simulation and mathematical programming to analyze problems of decision making under risk for developing countries. The results will assist in the design of new rural financial institutions conducive to the adoption of new production technologies by subsistence farmers.