Macroinsurance for Microenterprises: A Randomized Experiment in Post-Revolution Egypt 2011
Egypt, Arab Rep., 2011 - 2012
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EGY_2011_MMIE_v01_M_v01_A_PUF
Macroinsurance for Microenterprises: A Randomized Experiment in Post-Revolution Egypt 2011
| Name | Country code |
|---|---|
| Egypt, Arab Rep. | EGY |
Enterprise Survey
Firms in many developing countries cite macroeconomic instability and political uncertainty as major constraints to their growth. Economic theory suggests uncertainty can cause firms to delay investments until uncertainty is resolved. The study conducted a randomized experiment in post-revolution Egypt to measure the impact of insuring microenterprises against macroeconomic and political uncertainty.
Prior to the impact evaluation, the researchers conducted a market research survey of 320 microenterprises in Alexandria, Cairo, and Giza. The survey result shows that microenterprises would be interested in insurance against macroeconomic shocks. As part of the impact evaluation study, the researchers conducted a baseline survey before the launch of the insurance product and an endline survey several months after the deadline to purchase the insurance passed.
Demand for macroeconomic shock insurance was high: 36.7 percent of microentrepreneurs in the treatment group purchased insurance. However, purchasing insurance does not change the likelihood that a business takes a new loan, the size of the loan, or how they invest this loan. The study attributes this lack of effect to microenterprises largely investing in inventories and raw materials rather than irreversible investments like equipment. These results suggest that, contrary to what microenterprises progress profess, macroeconomic and political risk is not inhibiting the investment behavior. However, insurance may still be of value to them to help cope with shocks when they do occur.
Sample survey data [ssd]
Enterprises
Version
Macroinsurance for Microenterprises 1.0 is an edited, anonymized dataset for public distribution.
• Market research survey of 320 urban microenterprises in Alexandria, Cairo, and Giza
• Baseline and endline survey of the 2,961 and 2,927 microenterprises, respectively, in Alexandria
• The data are labeled b for baseline, m for endline, admin for administrative data from Alexandria Businessmen Association, epp for administrative data directly related to the pilot insurance product
Scope
Microenterprises, Uncertainty, Risk, Insurance, Political instability, Access to finance, Asset ownership, Sales, Profits, Investment, and Consumption
Coverage
Alexandria, Egypt
Producers and sponsors
| Name | Affiliation |
|---|---|
| Matthew Groh | World Bank |
| David McKenzie | World Bank, BREAD, CEPR, IZA |
| Tara Vishwanath | World Bank |
| Name | Role |
|---|---|
| Strategic Research Program | Technical assistance in data processing and writing the research paper and notes |
| Name |
|---|
| World Bank’s Knowledge for Change |
| TFESSD Trust Funds |
| International Initiative for Impact Evaluation |
Sampling
The evaluation sample consists of 2,980 individuals, with equal numbers assigned to treatment and control. The initial sample was selected from a list of 3,807 clients in 14 of Alexandria Businessmen Association (ABA)'s branches in Alexandria who were scheduled to repay their loans between 4/15/2012 and 7/31/2012 and whose loans are between 1,500 LE and 10,000 LE ($250 and $1,667). In the field, the study excluded 927 clients from the initial sample who either didn't own a business themselves or ABA's loan officers indicated are not eligible for future loans due to likelihood of future repayment delinquency.
The 2,980 ABA clients in the sample were randomly assigned by a computer program to two groups: treatment and control. The only difference between the two groups is the treatment group was eligible to purchase the EPP and the control was not. In order to achieve balance between the two groups, the study used a combination of stratification and pair--wise matching.
The researchers first stratified on gender and microfinance office branch to create 32 strata. There were 16 office branch codes; 14 of which are branches that make up ABA's operations in Alexandria, 1 was the code for clients who've transferred between branches, and 1 was the code for clients who've graduated from a sub--microlending program within ABA to microlending.
Within these 32 strata, the study created pair--wise matches using an "optimal greedy algorithm" to minimize the Mahalnobis distance between the values of 13 variables likely to drive loan take up and investment decisions.
There were no deviations from the sample design.
The attrition rate was low. In the baseline survey, the enterprises response rate was 2961/2980 (99.4%) compared to the sample. In the endline survey, the enterprises response rate was 2927/2961 (98.9%) compared to the baseline.
Data collection
| Start | End | Cycle |
|---|---|---|
| 2011-12 | 2012-01 | Market research survey |
| 2012-03 | 2012-04 | Baseline survey |
| 2012-10 | 2012-11 | Follow-up survey |
| Name | Affiliation |
|---|---|
| El Zanaty and Associates | Survey Research Firm |
In December 2011, the researchers conducted a pre-intervention research survey on 320 microentrepreneurs in urban areas in Cairo, Giza, and Alexandria to determine the feasibility and demand for a macroeconomic shock microinsurance product. The responses to this pre-intervention research survey indicated a strong demand for macroeconomic shock insurance and a high likelihood of development impact.
The primary sources of data are a baseline survey conducted in March 2012 immediately before the EPP was offered to ABA clients, a follow-up survey in September or October, another follow-up survey immediately after any economic shock, and an endline survey one month after the last ABA client’s EPP expires or one year after the economic shock. In addition, ABA will provide us with administrative loan tracking data.
Data Access
| Name | Affiliation | |
|---|---|---|
| David McKenzie | World Bank | dmckenzie@worldbank.org |
The use of the datasets must be acknowledged using a citation which would include:
- the identification of the Primary Investigator (including country name);
- the full title of the survey and its acronym (when available), and the year(s) of implementation;
- the survey reference number;
- the source and date of download (for datasets disseminated online).
Example:
Matthew Groh, David McKenzie, and Tara Vishwanath, World Bank. Macroinsurance for Microenterprises: A Randomized Experiment in Post-Revolution Egypt 2011, Ref. EGY_2011_MMIE_v01_M_v01_A_PUF. Dataset downloaded from [URL] on [date].
Disclaimer and copyrights
The user of the data acknowledges that the original collector of the data, the authorized distributor of the data, and the relevant funding agency bear no responsibility for use of the data or for interpretations or inferences based upon such uses.
Contacts
| Name | Affiliation | |
|---|---|---|
| Matthew Groh | World Bank | mgroh@poverty-action.org |
Metadata production
DDI_EGY_2011_MMIE_v01_M_v01_A_PUF
| Name | Affiliation | Role |
|---|---|---|
| Development Data Group | The World Bank | Documentation of the DDI |
2014-09-11
Metadata version
Version 01 (September 2014)