Abstract
The objective of this study is to investigate the effect of digital financial service on the market risk of farm business. Our empirical methodology allows us to first estimate, controlling for self-selection problem, the take-up likelihood of digital service (proxied with mobile money) by agribusiness. Second, for those agribusiness entrepreneurs who have adopted the digital financial service, we assess the effect of such service on their market risk. Whether digital service adoption contributes to risk reduction? The data set used in the model comes from Kenya’s FinAccess Survey 2015. The results show a negative association of digital financial service take-up with agribusiness market risk, meaning that as more financial service is adopted, agribusiness risk reduces. Our finding supports a submission that there is a beneficial negative association between digital financial service and market risk for agribusiness. This research outcome will benefit agribusiness industry, and improve targeted development policy intervention.