Demand for Farm Insurance Under Financial Constraints

This article investigates the effect of the use of crop insurance on farms' economic performance. The authors hypothesize the existence of reciprocal causation between crop insurance use and the economic performance of farms in an environment characterized by imperfect financial markets and far...

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Bibliographic Details
Published in:Eastern European economics 2017-07, Vol.55 (4), p.357-376
Main Authors: Baráth, Lajos, Bokusheva, Raushan, Fertő, Imre
Format: Article
Language:English
Subjects:
crop insurance demand
farm investment
farm productivity
financial constraints
Hungarian agriculture
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Summary:This article investigates the effect of the use of crop insurance on farms' economic performance. The authors hypothesize the existence of reciprocal causation between crop insurance use and the economic performance of farms in an environment characterized by imperfect financial markets and farm budget constraints. The results confirm the reciprocal causation hypothesis. Economic performance is found to positively influence farms' demand for insurance, confirming the significance of budget constraints. Moreover, insurance is found to have a negative effect on Hungarian farms' economic performance, implying that the crop insurance system is inefficient.
ISSN:0012-8775
1557-9298
DOI:10.1080/00128775.2017.1294986