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The effect of microinsurance on the financial resilience of low-income households in Ghana: evidence from a propensity score matching analysis

Emmanuel Owusu Oppong (), Baorong Yu and Bruvine Orchidée Mazonga Mfoutou
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Emmanuel Owusu Oppong: University of International Business and Economics
Baorong Yu: University of International Business and Economics
Bruvine Orchidée Mazonga Mfoutou: University of International Business and Economics

The Geneva Papers on Risk and Insurance - Issues and Practice, 2024, vol. 49, issue 3, No 4, 474-500

Abstract: Abstract Microinsurance has emerged as a potential way to fortify the financial resilience of low-income households by providing a safety net against economic uncertainty and promoting financial inclusion for the poor. In light of the current economic downturn in Ghana, several institutions have advocated for the implementation of microinsurance programmes to support the financial stability of low-income households in the informal sector. This study assesses the impact of microinsurance on the financial resilience of the poor in Ghana, proxied by income and precautionary savings. The study analyses data on 1453 households from three regions using propensity score matching, Tobit and Probit instrumental variable techniques. The study finds that microinsurance adoption improves the financial resilience of the poor and reduces dependence on precautionary savings, a self-insurance strategy which significantly increases the financial burden on households, thereby exacerbating the impact of shocks.

Keywords: Microinsurance; Financial resilience; Precautionary savings; Propensity score matching; Average treatment effect; Financial inclusion (search for similar items in EconPapers)
Date: 2024
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DOI: 10.1057/s41288-024-00325-0

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