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Asset Collateralized Loans: Non-linear Repayments

KEN -22 -1821

Last modified on December 19th, 2025 at 10:42 am

    Basic Information

  • Abstract
    Rainfall and temperature variability induced by climate change pose a substantial economic risk to smallholder dairy farmers in developing countries. Rainwater harvesting tanks may help farmers adapt to climate uncertainty. Previous work has found that Asset Collateralized Loans (ACLs) helped farmers purchase water tanks in Kenya (Jack et al., 2023). This study builds on previous work and evaluates the impact of ACLs for water tanks on economic and household outcomes with two dairy cooperatives in Rift Valley, Kenya. The study also tested an alternative ACL design in which required monthly payments were a function of milk income, which may be better adapted to farmers with seasonally variable income.
  • Status
    Ongoing
  • Start date
    Q2 Jun 2022
  • Experiment Location
    Kenya
  • Partner Organization
    Development Innovation Lab - University of Chicago, Sirikwa Dairy Cooperative, Lessos Dairy Cooperative, LEPESA SACCO
  • Agricultural season
    _Multiple seasons

    • Research Design

  • Experiment type
    Impact Evaluation
  • Sample frame / target population
    Dairy farmers
  • Sample size
    1,512
  • Outcome type
    Service engagement, Financial behavior, Agricultural profits / revenues, Agricultural production / yield, Household or productive assets, Health
  • Mode of data collection
    Partner administrative data, In-person survey, Phone survey
  • Research question(s)
    1. For smallholder dairy farmers, what is the impact of ACL-financed water tanks on (a) loan take-up, (b) loan repayment rates, (c) milk production, (d) water storage capacity, and (e) diarrhea incidence for children under 5?

    2. How do repayment rates and default risks compare across different ACL contract structures?
  • Research theme
    Agricultural management advice, Input recommendations, Service design, Social learning
  • Research Design

    We evaluated the impact of ACLs for water tanks using a stratified, matched-octad randomized controlled trial with 1,512 smallholder dairy farmers in Kenya. To increase power, we first screened out farmers with no interest in a tank loan. Eligible farmers were stratified by their dairy cooperative, access to piped water, and the presence of young children in the household, then grouped into octads using the Mahalanobis distance. Four farmers from each octad were randomly offered an ACL and four were assigned to the control group.

    For further information on the previous RCT, see Jack et al., 2023.

    See the American Economic Association’s (AEA) registry for randomized controlled trials for this study: RCT ID AEARCTR-0009662

    • Results

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Date Result Anticipated
Add reminder to Google Calendar to update your entry on: 15 Dec 2025

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