Does Microcredit Increase Household Welfare in the Absence of Microinsurance?. (January 2016)

• Record Type: Journal Article
• Authors: Akotey, Joseph Oscar; Adjasi, Charles K.D.
• Is Part Of: World development. Volume 77(2016)
• Page Start: 380
• Page End: 394
• Publication Date: 2016-01
• Subjects: microcredit -- microinsurance -- welfare -- households -- Ghana; Economic history -- 1990- -- Periodicals; Economic assistance -- Developing countries -- Periodicals; 330.9
• DOI: 10.1016/j.worlddev.2015.09.005
• Languages: English
• ISSNs: 0305-750X

Abstract

Summary: This study answers the question: Does a combination of microcredit and microinsurance improve the wellbeing of low-income households? We examine this challenge through Heckman sample selection, instrumental variable and treatment effect models. The findings indicate that households using microcredit in combination with microinsurance derive significant gains in terms of welfare improvement. Microcredit may be good but its benefit to the poor is enhanced and sustained if the poverty trapping risks are covered with microinsurance. To this extent, combining microcredit with microinsurance will empower the poor to make a sustainable exit from poverty.