Determinants of financial risk attitude among the handloom micro-entrepreneurs in North East India

The rural non-farm micro-entrepreneurial activities in the informal sector hold significance in generating employment, removing poverty, and income inequality. The handloom industry in India holds a distinctive place in the Indian economy as it is the second largest provider of rural employment after agriculture. The North Eastern states of India accounts for more than 65 percent of the total handloom households in India. However, with only 4.26 percent of the total working looms utilized for commercial purposes, the industry is beset with manifold problems such as obsolete technologies, unorganized production system, low productivity, inadequate working capital, and weak market linkages. Therefore, undertaking financial risk plays here a defining role in overcoming these obstacles. Based on the primary data collected from 332 respondents, the present study analyzes determinants of financial risk attitude of the handloom micro-entrepreneurs using the Ordinal Probit model. Education, access to credit, access to training, and individual's income play a crucial role in influencing the risk aversion of the micro-entrepreneurs. These determinants are found to have a more dominant influence in lowering the risk aversion of female micro-entrepreneurs as compared to the male micro-entrepreneurs. The study suggests for providing vocational education and training programs that focus on entrepreneurship education to the rural female micro-entrepreneurs. Besides, it suggests for the provision and implementation of various financial inclusion programs for easy access to credit with proper follow up programs to ensure the efficient utilization of credit, with a primary focus on the female micro-entrepreneurs.