When risk-aversion promotes enterprise formation

ABSTRACT

In this article, risk-aversion promotes rural enterprises formation contrasting with the theoretical motivations of new entrepreneurs. Rather than risk seeking, rural entrepreneurs are risk-averse, and instead of opportunities, the operators seek livelihood insurance. This finding indicates the value of insurance penetration in the rural areas.

KEYWORDS:

• Rural nonfarm enterprises
• risk aversion
• Nigeria
• risk preference

JEL CLASSIFICATION:

• M13
• C25

Disclosure statement

No potential conflict of interest was reported by the author.

Notes

¹ Households with RNFEs older than 5 years are deleted.

² CSR imposes similarity in all control variables.