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The Impact of Microinsurance on Household Asset Accumulation in Ghana: An Asset Index Approach

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  • Joseph Oscar Akotey

    (University of Stellenbosch Business School, P.O. Box 610, Bellville 7535, Cape Town, South Africa)

  • Charles Adjasi

    (University of Stellenbosch Business School, P.O. Box 610, Bellville 7535, Cape Town, South Africa)

Abstract

This paper examines the link between microinsurance services and households’ asset accumulation in Ghana. Using FINSCOPE data from the nation-wide household surveys conducted by FinMark Trust, we created a household asset index using the multiple correspondence analysis approach. We employed three methods: Heckman sample selection, instrumental variable and treatment effects models to estimate the impact of microinsurance on household asset accumulation. These models control for the problem of endogeneity treatment effects and self-selection bias associated with the usage of microinsurance services. The findings show that microinsurance has a positive welfare impact in terms of household asset accumulation. This suggests that microinsurance prevents asset pawning and liquidation of essential household assets at “give away” prices. By absorbing the risk of low-income households, insurance equips them to cope effectively with risk, empowers them to escape poverty and sustains the welfare gains achieved.

Suggested Citation

  • Joseph Oscar Akotey & Charles Adjasi, 2014. "The Impact of Microinsurance on Household Asset Accumulation in Ghana: An Asset Index Approach," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 39(2), pages 304-321, April.
    • Handle: RePEc:pal:gpprii:v:39:y:2014:i:2:p:304-321
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    Citations

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    Cited by:

    1. 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.
    2. Abdul Latif Alhassan & Noluyolo Magazi, 2021. "Microinsurance and household asset welfare in South Africa," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 46(3), pages 358-382, July.
    3. Stephan Dietrich, 2017. "Coping with Shocks: Impact of Insurance Payouts on Small-Scale Farmers," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 42(2), pages 348-369, April.
    4. Isaac Akomea-Frimpong & Caleb Boadi & Roger Owusu-Boafo, 2021. "Determinants and challenges of supplying microlife insurance in Ghana," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 46(3), pages 331-357, July.
    5. Pu Liao & Xianhua Zhou & Qingquan Fan, 2020. "Does agricultural insurance help farmers escape the poverty trap? Research based on multiple equilibrium models," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 45(1), pages 203-223, January.
    6. Shruti Malik & Girish Chandra Maheshwari & Archana Singh, 2019. "Understanding Financial Inclusion in India: A Theoretical Framework Building Through SAP–LAP and Efficient IRP," Global Journal of Flexible Systems Management, Springer;Global Institute of Flexible Systems Management, vol. 20(2), pages 117-140, June.

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