Cooperative Interlinked Credit Guarantee Failure
Zero interlinked loan contracts were executed due to cooperative unions refusing to guarantee non-weather default risk. Consequently, 100% of realized insurance sales were standalone policies. However, in interlinked villages, farmers who bought insurance demanded higher coverage (mean sum insured = 2,018 Birr vs. 1,295 Birr in standalone villages, p < 0.10) expecting it would unlock future credit.