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Remittances, Banking Status and the Usage of Insurance Schemes

  • Dorothee Crayen
  • Christa Hainz
  • Christiane Stöh de MartÍnez

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 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 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.

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File URL: http://hdl.handle.net/10.1080/00220388.2013.777706
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Article provided by Taylor & Francis Journals in its journal The Journal of Development Studies.

Volume (Year): 49 (2013)
Issue (Month): 6 (June)
Pages: 861-875

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Handle: RePEc:taf:jdevst:v:49:y:2013:i:6:p:861-875
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