| In recent years, agricultural insurance, as a non-price tool to protect agriculture under "Green Box" framework of WTO in mitigating risk and offsetting loss, has been attracting increasing attention from more and more countries of the world. China Central Government proposed to gradually establish and perfect policy-oriented agricultural insurance system by providing more financial support in ten No.1documents from2004to2013. Chinese agricultural insurance revealed a vigorous development trend since the Ministry of Finance in China began to subsidy the insurance premium according to WTO rules in2007. As one of the first pilot regions, agricultural insurance market in Inner Mongolia Autonomous Region rapidly expands. The premium income, increasing by3.44times, has growed from0.433billion Yuan to1.921billion Yuan from2007to2012; the subsidies from governments of all levels, increasing by4.16times, has added up to1.738billion Yuan from0.337billion Yuan. So financial subsidies from governments of all levels obviously are an important promoter to rapid development of agricultural insurance in Inner Mongolia. However, whether the extensive subsidies to agricultural insurance can stabilize farmers'income? Is there moral hazard or adverse selection resulting from information asymmetry during the extension of the current agricultural insurance? The theoretical study and empirical test with regard to the above problems can not only supplement and improve theory of agricultural insurance with Chinese characteristics, but also can provide decision basis and policy recommendations to further prompt sustainable development of agricultural insurance in Inner Mongolia even in the whole of China.Based on above background, this study, focusing on the agricultural insurance practice from2007to2012in Inner Mongolia, theoretically analyses and empirically explores policy effect and operating risk of agricultural insurance by making good use of theories and methods of microeconomics, agricultural economics, econometrics, etc. in order to rationally expound and prove two propositions:(1) Whether the current crop insurance can stabilize farmers'income? If it's possible, whether the benefits from crop insurance have being enjoyed by the insured farmers? What is the main factor influencing policy effect of crop insurance, and its deep-rooted reasons?(2) Is there some operating risks to current agricultural insurance? i.e., do behavioral agents'moral hazard and adverse selection deriving from information asymmetry exist? If they exist, how to reduce? There are four main parts in this thesis, shown as the following:Part1:to evaluate the policy effect of crop insurance program to stabilize farmers' income.Theoretically, crop insurance can reduce fluctuation of farmers' income, in other words, it can mitigate risk, compensate loss, and stabilize farmers' income. However, we adopt a variety of robust treatment effect estimation strategies including difference-in-difference (DID), propensity score matching (PSM), and hybrid propensity score matching difference-in-difference treatment effect estimators (PSM-DID) to empirically investigate the causal impact of crop insurance program participation on farmers'income in Inner Mongolia from China, and the results show that crop insurance can not significantly affect farmers'income under the current system of "low-guarantee, wide-coverage, low-premium and low-indemnity" in Inner Mongolia.Part2:to explain the cause of settling a claim by negotiation.The results indicate that the mode of settling a claim by negotiation is one of direct factors influencing policy-oriented crop insurance to guarantee farmers'income stability. Fundamentally speaking, settling a claim by negotiation results from low-level equilibrium of benefits of three behavioral agents (including farmer, government and insurance company) because of being unequal status. Meanwhile, it also is realistic choice of behavioral agents in the mouth of their own interest, specifically manifested in inconsistency between utility maximization of farmers and their position of the vulnerable group, social welfare maximization of governments giving way to maintain the policy sustainability and social stability, mismatch between optimal self-interests of insurance company and construction of grass-roots organization.Part3:to examine moral hazard of three behavioral agents.The empirical results and some cases point to the existence of moral hazard of farmer, government, and insurance company under the current policy of agricultural insurance. The moral hazard of farmer can be divided into two types:one is inactive behavior of farmers ex ante to prevent loss and inactive behavior ex post to mitigate loss; the other is intentional fraud ex ante or ex post. The practical reasons leading to the existence of moral hazard of three behavioral agents involve cognitive biases and fluke minds from farmer, interests-driven and opportunistic behavior from company insurance, and cognitive mistakes and absence of supervision from government. Meanwhile, moral hazard can not bring about frustration of business development of insurance company, but also lead to dissipation of financial subsidies from governments at all levels. However, the empirical results show that the insured producer can not adopt inactive behavior to prevent loss ex ante and to mitigate loss ex post, and find that insurance fraud (including fabricating insurance object ex ante, and deceiving claims ex post) really exists in crop insurance market or in livestock insurance market under the current policy of "low-guarantee, wide-coverage, low-premium and low-indemnity" in Inner Mongolia from China.Part4:to theoretically and empirically explore adverse selection of farmer in crop insurance market.The generating mechanism of adverse selection is that risk difference of the insured farmer exists objectively, and insurance company makes premium rate according to average loss probability in agricultural production. Its deeper reasons are the specificity of insurance objects, weakness of operating management of insurance company, and cognitive bias of some farmers. Adverse selection may result in risk accumulation and supply-demand imbalance of agricultural insurance. In addition, this paper uses non-parametric analysis and econometric model to empirically test the presence of adverse selection of the insured farmer under the present crop insurance system of "low-guarantee, wide-coverage, low-premium and low-indemnity". The results indicate that adverse selection of farmers does exist, but it is not serious, whose reasons may be the mode of settling a claim by negotiation and considerable premium subsidies from governments at all levels.The innovations of this paper include two aspects. Firstly, in theoretical analysis, we analyze systematically the concept, manifestation, consequence and cause of the mode of settling a claim by negotiation, and thoroughly and deeply explore the generating mechanism and consequence of moral hazard from three behavioral agents (including farmer, government and insurance company) and of adverse selection from farmer under the current policy of agricultural insurance in Inner Mongolia. The conclusions can not only offer theoretical basis to eliminate the mode of settling a claim by negotiation, but also perfect the theory of information asymmetry of agricultural insurance. Secondly, in empirical study, we evaluate the policy effect of crop insurance program to stabilize farmers'income and identify the information asymmetry risks including moral hazard and adverse selection based on the first-hand data collected by questionnaires under the current system of crop insurance or livestock insurance in Inner Mongolia from China. The empirical results can provide more robust or more reliable decision basis for policy makers and policy implementer to access the effectiveness of agricultural insurance on farmers' income and estimate its operating risks. |
PDF Full Text Request