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The effect of microinsurance on the financial resilience of low-income households in Ghana: evidence from a propensity score matching analysis

Author

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  • Emmanuel Owusu Oppong

    (University of International Business and Economics)

  • Baorong Yu

    (University of International Business and Economics)

  • Bruvine Orchidée Mazonga Mfoutou

    (University of International Business and Economics)

Abstract

Microinsurance has emerged as a potential way to fortify the financial resilience of low-income households by providing a safety net against economic uncertainty and promoting financial inclusion for the poor. In light of the current economic downturn in Ghana, several institutions have advocated for the implementation of microinsurance programmes to support the financial stability of low-income households in the informal sector. This study assesses the impact of microinsurance on the financial resilience of the poor in Ghana, proxied by income and precautionary savings. The study analyses data on 1453 households from three regions using propensity score matching, Tobit and Probit instrumental variable techniques. The study finds that microinsurance adoption improves the financial resilience of the poor and reduces dependence on precautionary savings, a self-insurance strategy which significantly increases the financial burden on households, thereby exacerbating the impact of shocks.

Suggested Citation

  • Emmanuel Owusu Oppong & Baorong Yu & Bruvine Orchidée Mazonga Mfoutou, 2024. "The effect of microinsurance on the financial resilience of low-income households in Ghana: evidence from a propensity score matching analysis," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 49(3), pages 474-500, July.
    • Handle: RePEc:pal:gpprii:v:49:y:2024:i:3:d:10.1057_s41288-024-00325-0
    DOI: 10.1057/s41288-024-00325-0
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