Problems of crediting and insurance in agriculture
Small farmers in developing countries pay higher insurance premium or interest rate and yet, rural loans or insurance are rather scarce for them. Does it mean rural insurance/loans in undeveloping countries are not profitable? Many analysis and trends in the global financial services market to the contrary, as evidenced by numerous references, yet in developing countries there are some problems in development of these types of financial services, which could significantly assist in the development agriculture. Adverse selection in insurance markets refers to the situation where insurers find it impossible or very expensive to distinguish between high-risk and low risk insurance applicants and thus prices insurances contracts at the average premium for all individuals, which is inappropriate.
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