Remittances, Banking Status and the Usage of Insurance Schemes

45 Pages Posted: 12 Jul 2010

See all articles by Dorothee Crayen

Dorothee Crayen

University of Tuebingen

Christa Hainz

CESifo (Center for Economic Studies and Ifo Institute) - Ifo Institute

Christiane Stroeh de Martinez

Free University of Berlin (FUB)

Date Written: July 12, 2010

Abstract

Empirical evidence that migrants send home more remittances after disasters raises the question of whether remittances can be 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 purchasing formal funeral cover is influenced by other risk management strategies and that determinants of informal insurance differ from those of formal insurance.

Keywords: remittances, insurance, risk management strategies

JEL Classification: D14, F24, G22, O16

Suggested Citation

Crayen, Dorothee and Hainz, Christa and Stroeh de Martinez, Christiane, Remittances, Banking Status and the Usage of Insurance Schemes (July 12, 2010). CESifo Working Paper Series No. 3117. Available at SSRN: https://ssrn.com/abstract=1638868

Dorothee Crayen

University of Tuebingen ( email )

Economic History
Mohlstr. 36
Tuebingen, 72074
Germany

HOME PAGE: http://www.uni-tuebingen.de/uni/wwl/crayen/crayen.html

Christa Hainz

CESifo (Center for Economic Studies and Ifo Institute) - Ifo Institute ( email )

Poschinger Str. 5
Munich, 81069
Germany

Christiane Stroeh de Martinez (Contact Author)

Free University of Berlin (FUB) ( email )

Van't-Hoff-Str. 8
Berlin, 14195
Germany

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