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Does Microcredit Increase Household Welfare in the Absence of Microinsurance?

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  • Akotey, Joseph Oscar
  • Adjasi, Charles K.D.

Abstract

This study answers the question: Does a combination of microcredit and microinsurance improve the wellbeing of low-income households? We examine this challenge through Heckman sample selection, instrumental variable and treatment effect models. The findings indicate that households using microcredit in combination with microinsurance derive significant gains in terms of welfare improvement. Microcredit may be good but its benefit to the poor is enhanced and sustained if the poverty trapping risks are covered with microinsurance. To this extent, combining microcredit with microinsurance will empower the poor to make a sustainable exit from poverty.

Suggested Citation

  • Akotey, Joseph Oscar & Adjasi, Charles K.D., 2016. "Does Microcredit Increase Household Welfare in the Absence of Microinsurance?," World Development, Elsevier, vol. 77(C), pages 380-394.
  • Handle: RePEc:eee:wdevel:v:77:y:2016:i:c:p:380-394
    DOI: 10.1016/j.worlddev.2015.09.005
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    Cited by:

    1. Dina Chhorn, 2018. "Effect of Microfinance on Poverty and Welfare: New Evidence from 9 provinces in Cambodia," Cahiers du GREThA 2018-12, Groupe de Recherche en Economie Théorique et Appliquée.
    2. repec:dug:actaec:y:2018:i:5:p:127-140 is not listed on IDEAS

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    Keywords

    microcredit; microinsurance; welfare; households; Ghana;

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