Risk Management, financial innovation and institutional development in rural areas: evidence from the coffee sector in Ethiopia

The vulnerability of rural households in developing countries badly affects living standards. Risks of different nature challenge farmers’ living conditions and limit their ability to develop their capacity, even if investment opportunities exist. These risks represent constraints on the access to different sources of finance. Risk, therefore, is to be considered a major factor affecting the potential for economic growth. This research deals with yield and price risk management and suggests product and institutional innovations, describing the most modern approaches based on market instruments. After a theoretical section, the case of coffee growers of Ethiopia follows reporting the results of a field study.