Remittances, Banking Status and the Usage of Insurance Schemes
CESifo, Munich, 2010
CESifo Working Paper No. 3117
![](https://cesifo.org/DocImg/cesifo1_wp3117.jpg?c=1689237022)
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.
Empirical and Theoretical Methods