Can Interlinked Credit and Insurance Contracts Boost Farmers' Adoption of Improved Rice Varieties? Field Experimental Evidence from China

Based on microdata from field experiments collected in Hunan and Sichuan Provinces, this study employs the probit model and mediating effect model in field experiments to evaluate the impact of interlinked credit and insurance contracts (ICIC) on farmers' adoption of improved rice varieties. The results show that ICIC has a significantly positive impact on farmers' adoption of improved rice varieties. It can promote the adoption of improved rice varieties by alleviating farmers' risk aversion and credit constraint, which account for 18.01% and 21.03% of the total effect of ICIC on farmers' adoption of rice varieties, respectively. To an extent, the ICIC's effect on farmers' adoption of improved rice varieties is influenced by household income and motivation for planting rice. This interplay between collateral and the characteristic of credit–insurance interlinkage has direct and essential implications for the design of programmes to simultaneously enhance the adoption of innovative agricultural technologies. Meanwhile, this research provides microfoundations and policy recommendations for household technological adoption in rural China and provides insights on how the government can formulate relevant policies to promote innovative technological extension.