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Remittances, Banking Status and the Usage of Insurance Schemes

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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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    References listed on IDEAS

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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 005, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    2. 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.
    3. repec:hur:ijarbs:v:7:y:2017:i:7:p:232-259 is not listed on IDEAS
    4. 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.
    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.

    More about this item

    Keywords

    Remittances; insurance; risk management strategies;

    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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