The Effect of Rainfall Changes on Microcredit Demand in Rural Morocco

Details

Supervisors

Parienté, William

Faculty

Faculté des sciences économiques, sociales, politiques et de communication

Degree label

Master [120] en sciences économiques, orientation économétrie, à finalité approfondie

Abstract

In this study, we aim to address two key questions: First, is there a relationship between past rainfall amounts in specific communes and microcredit demand within those communes? Second, if such a relationship exists, how do rainfall shocks impact microcredit demand? Our analysis, using a panel data random effects model, revealed a statistically significant positive correlation between previous rainfall amounts and the number of loans taken in rural communes, with significance at the 0.01 confidence level. We investigated the impact of positive and negative rainfall shocks on microcredit demand. To do so, we divided our sample into two categories: those affected by positive rainfall shocks and those affected by negative rainfall shocks for each duration. We consistently observed a positive relationship in the subsample affected by only positive rainfall shocks. However, in the subsample experiencing only negative rainfall shocks, the sign of coefficients changed. We can infer that microcredit demand does not immediately increase during the early days of a negative rainfall shock. Instead, demand begins to rise as the severity of the shock intensifies.