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Remittances, Banking Status and the Usage of Insurance Schemes

Author

Listed:
  • 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 are used to self-insure, substituting for both formal and informal insurance. We investigate this question using a unique dataset 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 other risk management strategies influence the purchasing of formal funeral cover. Finally, we find that determinants of informal insurance differ from those of formal insurance.

Suggested Citation

  • Dorothee Crayen & Christa Hainz & Christiane Ströh de Martinez, 2012. "Remittances, Banking Status and the Usage of Insurance Schemes," ifo Working Paper Series 137, ifo Institute - Leibniz Institute for Economic Research at the University of Munich.
  • Handle: RePEc:ces:ifowps:_137
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    Cited by:

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    2. 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.
    3. Yu-Fu Chen & Michael Funke, 2010. "Global Warming And Extreme Events: Rethinking The Timing And Intensity Of Environmental Policy," Dundee Discussion Papers in Economics 236, Economic Studies, University of Dundee.
    4. King, Michael & Singh, Anuj Pratap, 2020. "Understanding farmers’ valuation of agricultural insurance: Evidence from Vietnam," Food Policy, Elsevier, vol. 94(C).
    5. 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.
    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. Dorothee Crayen & Christa Hainz & Christiane Ströh de Martínez, 2011. "The insurance function of migrants' monetary transfers back home: A case study of South Africa," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 64(10), pages 17-21, May.

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    More about this item

    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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