Abstract
This study empirically examines determinants of Micro-insurance ownership decision in Ghana. Probit estimation technique was used to examine data sourced from 612 informal commercial business operators in selected urban market centers in Ghana. The results reveal that financial literacy has significant effect on micro-insurance ownership decision among informal commercial market business operators in Ghana. The study also found income, access to credit, trust, market levy, Marital status and household headship status as other major predictors of micro-insurance ownership decision. Premised on these, the study recommends financial literacy education intervention by micro-insurance providers to increase microinsurance patronage. Micro-insurance providers should invest in building reputation to encourage participation in micro-insurance scheme. Also, efforts of government should focus on improving access to credit facilities and income generation prospects among informal businesses operators in Ghana.
Highlights
Risk and its negative impact on productive asset, livelihoods and income has become issue of major concern in recent times
Micro-insurance has been identified as important risk mitigating mechanism for poor households who are mainly engaged in informal sector activities
The results of probit regression estimates suggest that financial literacy, income credit access and household headship status increase the probability of micro-insurance ownership decision
Summary
Risk and its negative impact on productive asset, livelihoods and income has become issue of major concern in recent times. Microinsurance has been identified to offer solution to negative impact of risk and welfare enhancement through sustainable income and consumption smoothing(Akotey & Adjasi, 2014); decision to insure is constrained among other factors by poor financial decision making due to financial illiteracy and inadequate financial resource among small business owners (Ito & Kono, 2010; Akotey, Osei, & Gemegah, 2011). Despite this knowledge, empirical researches explaining decision to own micro-insurance have remained rare, in Ghana. Responding to impacts of risk through micro-insurance remains essential concern to the poor and the vulnerable, in poor developing economies
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