Cash Timing and Liquidity Mismatch in Insurance Demand

In Simple Words

Imagine a wage worker who receives a bonus on the first of the month and spends it on household essentials. If a vendor tries to sell them a valuable rainy-day insurance plan three weeks later, the worker cannot buy it simply because their wallet is empty.

Research question

Smallholder demand for financial risk management products collapses when sales windows occur after post-harvest cash reserves are exhausted or after input purchasing decisions have already been finalized.

Participants

N = 2,399 rural households surveyed across 120 Kebeles in Amhara, Ethiopia.

Study Design

Observational supply-chain timeline evaluation comparing actual insurance sales timing against farm-level cash availability and input procurement dates.

Results

Delays in marketing meant farmers had already spent cash reserves on fertilizer prior to insurance offer windows, depressing cash sales. 70% of households reported lacking sufficient income for basic needs, amplifying time-sensitive liquidity barriers.

Takeaway

Synchronize sales campaigns for agricultural insurance and financial products with post-harvest periods when rural households experience peak cash liquidity.

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