Grain Today, Gain Tomorrow: Evidence from an Arbitrage Experiment with Savings Clubs in Kenya
By Shilpa Aggarwal, Eilin Francis, Jonathan Robinson
Journal of Development Economics | September 2018
Journal of Development Economics | September 2018
Citation
Aggarwal, Shilpa., Francis, Eilin., Robinson, Jonathan. (2018). Grain Today, Gain Tomorrow: Evidence from an Arbitrage Experiment with Savings Clubs in Kenya Journal of Development Economics www.sciencedirect.com/journal/journal-of-development-economics.
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Journal of Development Economics, 2018
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Abstract
Many farmers in the developing world lack access to effective savings and storage devices.
Such devices might be particularly valuable for farmers since income is received as a lump sum
at harvest but expenditures are incurred throughout the year, and because grain prices are
low at harvest but rise over the year. We experimentally provided two saving schemes to 132
ROSCAs in Kenya, one designed around communally storing maize and the other around saving
cash for inputs. About 56% of respondents took up the products. Respondents in the maize
storage intervention were 23 percentage points more likely to store maize (on a base of 69%),
37 percentage points more likely to sell maize (on a base of 36%) and (conditional on selling)
sold later and at higher prices. We find no effects of the individual input savings intervention
on input usage, likely because baseline input adoption was higher than expected.
Such devices might be particularly valuable for farmers since income is received as a lump sum
at harvest but expenditures are incurred throughout the year, and because grain prices are
low at harvest but rise over the year. We experimentally provided two saving schemes to 132
ROSCAs in Kenya, one designed around communally storing maize and the other around saving
cash for inputs. About 56% of respondents took up the products. Respondents in the maize
storage intervention were 23 percentage points more likely to store maize (on a base of 69%),
37 percentage points more likely to sell maize (on a base of 36%) and (conditional on selling)
sold later and at higher prices. We find no effects of the individual input savings intervention
on input usage, likely because baseline input adoption was higher than expected.
Shilpa Aggarwal is an Associate Professor of Economics and Public Policy at the Indian School of Business (ISB). She is a development economist, whose research aims to explore market linkages in developing countries. For her PhD dissertation, she examined the effects of a road construction programme in India that connected remote rural areas to nearby markets. Her ongoing research is focused on agricultural supply chains in India and East Africa. She also works on issues pertaining to domestic trade, microfinance, and food policy.
Professor Aggarwal holds a PhD from the University of California, Santa Cruz, an MA from the Delhi School of Economics, and a BA from Shri Ram College of Commerce, University of Delhi.
Shilpa Aggarwal