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Remittances, Banking Status and the Usage of Insurance Schemes

Author

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  • Dorothee Crayen
  • Christa Hainz
  • Christiane Ströh de Martinez

Abstract

Empirical evidence that migrants send home more remittances after disasters raises the question of whether remittances can be used to self-insure, substituting for both formal and informal insurance. We investigate this question using a unique data set on the usage patterns of financial services by households in South Africa. We show that the likelihood that a respondent has a formal funeral cover increases with income and banking status. However, it is lower for individuals receiving remittances, which supports the idea that remittances act as (self-) insurance. We also show that purchasing formal funeral cover is influenced by other risk management strategies and that determinants of informal insurance differ from those of formal insurance.

Suggested Citation

  • Dorothee Crayen & Christa Hainz & Christiane Ströh de Martinez, 2010. "Remittances, Banking Status and the Usage of Insurance Schemes," CESifo Working Paper Series 3117, CESifo.
    • Handle: RePEc:ces:ceswps:_3117
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    Cited by:

    1. Awel Y. & Azomahou T.T., 2015. "Risk preference or financial literacy? Behavioural experiment on index insurance demand," MERIT Working Papers 2015-005, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    2. Chen, Yu-Fu & Funke, Michael, 2010. "Global Warming And Extreme Events: Rethinking The Timing And Intensity Of Environmental Policy," SIRE Discussion Papers 2010-48, Scottish Institute for Research in Economics (SIRE).
    3. Dorothee Crayen & Christa Hainz & Christiane Ströh de Martínez, 2011. "Zur Versicherungsfunktion von Rücküberweisungen von Migranten: Eine Untersuchung in Südafrika," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 64(10), pages 17-21, May.
    4. Augustine Kwadwo Yeboah, 2018. "Determinants of Micro-Insurance Ownership Decision: Empirical Evidence from Informal Commercial Market Business Operators in Ghana," Journal of Social and Development Sciences, AMH International, vol. 8(4), pages 14-23.
    5. King, Michael & Singh, Anuj Pratap, 2020. "Understanding farmers’ valuation of agricultural insurance: Evidence from Vietnam," Food Policy, Elsevier, vol. 94(C).
    6. Zulekha Ndurukia & Agnes W. Njeru & Esther Waiganjo, 2017. "Factors Influencing Demand for Micro Insurance Services in the Insurance Industry in Kenya," International Journal of Academic Research in Business and Social Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Business and Social Sciences, vol. 7(7), pages 232-259, July.
    7. Platteau, Jean-Philippe & De Bock, Ombeline & Gelade, Wouter, 2017. "The Demand for Microinsurance: A Literature Review," World Development, Elsevier, vol. 94(C), pages 139-156.

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    More about this item

    Keywords

    remittances; insurance; risk management strategies;
    All these keywords.

    JEL classification:

    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • F24 - International Economics - - International Factor Movements and International Business - - - Remittances
    • G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies; Actuarial Studies
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

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