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Remittances, Banking Status and the Usage of Insurance Schemes

  • Dorothee Crayen
  • Christa Hainz

    ()

  • Christiane Ströh de Martinez

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.

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Paper provided by Ifo Institute for Economic Research at the University of Munich in its series Ifo Working Paper Series with number Ifo Working Paper No. 137.

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Date of creation: 2012
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Handle: RePEc:ces:ifowps:_137
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  1. Azam, Jean-Paul & Gubert, Flore, 2006. "Migrants' Remittances and the Household in Africa: A Review of Evidence," Economics Papers from University Paris Dauphine 123456789/5126, Paris Dauphine University.
  2. Takashi Kurosaki & Marcel Fafchamps, 1997. "Insurance Market Efficiency and Crop Choices in Pakistan," Working Papers 97010, Stanford University, Department of Economics.
  3. Hulme, David & Shepherd, Andrew, 2003. "Conceptualizing Chronic Poverty," World Development, Elsevier, vol. 31(3), pages 403-423, March.
  4. Roth, Jimmy, 2000. "Informal micro-finance schemes : the case of funeral insurance in South Africa," ILO Working Papers 344891, International Labour Organization.
  5. Mohapatra, Sanket & Joseph, George & Ratha, Dilip, 2009. "Remittances and natural disasters : ex-post response and contribution to ex-ante preparedness," Policy Research Working Paper Series 4972, The World Bank.
  6. Maurizio Bussolo & María Soledad Martínez Peria & César Calderón & Yira Mascaró & Mette E. Nielsen & Pablo Acosta & J. Humberto López & Çaglar Özden & Yoko Niimi & Luis Molina & Florencia Moizeszowicz, 2008. "Remittances and Development: Lessons from Latin America," IDB Publications (Books), Inter-American Development Bank, number 59678 edited by J. Humberto López & Pablo Fajnzylber, February.
  7. Dean Yang, 2006. "Coping with Disaster: The Impact of Hurricanes on International Financial Flows, 1970-2002," NBER Working Papers 12794, National Bureau of Economic Research, Inc.
  8. Dercon, Stefan & Christiaensen, Luc, 2011. "Consumption risk, technology adoption and poverty traps: Evidence from Ethiopia," Journal of Development Economics, Elsevier, vol. 96(2), pages 159-173, November.
  9. Phillippe G. Leite & Terry McKinley & Rafael Guerreiro Osório, 2006. "The Post-Apartheid Evolution of Earnings Inequality in South Africa, 1995-2004," Working Papers 32, International Policy Centre for Inclusive Growth.
  10. Banerjee, Abhijit & Duflo, Esther, 2006. "The Economic Lives of the Poor," CEPR Discussion Papers 5968, C.E.P.R. Discussion Papers.
  11. Lucas, Robert E B & Stark, Oded, 1985. "Motivations to Remit: Evidence from Botswana," Journal of Political Economy, University of Chicago Press, vol. 93(5), pages 901-18, October.
  12. Jonathan Morduch, 1995. "Income Smoothing and Consumption Smoothing," Harvard Institute of Economic Research Working Papers 1727, Harvard - Institute of Economic Research.
  13. Thankom Arun & Susan Steiner, 2008. "Micro-Insurance in the Context of Social Protection," Brooks World Poverty Institute Working Paper Series 5508, BWPI, The University of Manchester.
  14. Pramila Crivelli & Jasmin Gröschl, 2012. "The Impact of Sanitary and Phytosanitary Measures on Market Entry and Trade Flows," Ifo Working Paper Series Ifo Working Paper No. 136, Ifo Institute for Economic Research at the University of Munich.
  15. Zeller, Manfred & Sharma, Manohar, 2000. "Many borrow, more save, and all insure: implications for food and micro-finance policy," Food Policy, Elsevier, vol. 25(2), pages 143-167, April.
  16. Dean Yang & HwaJung Choi, 2005. "Are Remittances Insurance? Evidence from Rainfall Shocks in the Philippines," Working Papers 535, Research Seminar in International Economics, University of Michigan.
  17. Daryl Collins, 2005. "Financial instruments of the poor: Initial findings from the financial diaries study," SALDRU/CSSR Working Papers 130, Southern Africa Labour and Development Research Unit, University of Cape Town.
  18. Rees, Ray & Wambach, Achim, 2008. "The Microeconomics of Insurance," Foundations and Trends(R) in Microeconomics, now publishers, vol. 4(1–2), pages 1-163, February.
  19. Gubert, Flore, 2002. "Do Migrants Insure Those who Stay Behind? Evidence from the Kayes Area (Western Mali)," Economics Papers from University Paris Dauphine 123456789/10842, Paris Dauphine University.
  20. Tigran A. Melkonyan & David A. Grigorian, 2008. "Microeconomic Implications of Remittances in an Overlapping Generations Model with Altruism and Self-Interest," IMF Working Papers 08/19, International Monetary Fund.
  21. repec:idb:brikps:59678 is not listed on IDEAS
  22. Rapoport, Hillel & Docquier, Frederic, 2006. "The Economics of Migrants' Remittances," Handbook on the Economics of Giving, Reciprocity and Altruism, Elsevier.
  23. Daryl Collins, 2005. "Financial instruments of the poor: initial findings from the South African Financial Diaries study," Development Southern Africa, Taylor & Francis Journals, vol. 22(5), pages 717-728.
  24. Pablo Fajnzylber & J. Humberto López, 2008. "Remittances and Development : Lessons from Latin America," World Bank Publications, The World Bank, number 6911.
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