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Research has provided new information about risk management
Insurance News Net, 4 March 2010
"This article first investigates the microfinance-principally microinsurance-market at the global level and the business structure of over 600 microfinance institutions (MFIs) in 83 countries that were in operation during 1998-2007. It then empirically examines the impact of organisational, market and socio-cultural factors on the supply of insurance, lending and savings services by MFIs in developing countries," scientists in the United States report.
The researchers concluded: "From a series of probit analyses indicate that a rise in the financial expense ratio, loan repayments in arrears, years of operation, number of borrowers, woman borrower ratio, life insurance penetration ratio and family size positively affect MFIs' willingness to expand their operations, certainly to microinsurance business. In contrast, they are likely to stay away from the insurance market when their loan asset ratio, bad loan write-off ratio or average loan size in comparison to GNI per capita is on the rise. It seems MFIs focus on lending service in Muslim populous countries. Finally, we find no evidence that presence of insurance affects availability of savings service, and vice versa, in the microfinance market.
Kwon and colleagues published their study in Geneva Papers on Risk and Insurance - Issues and Practice (An Analysis of Organisational, Market and Socio-cultural Factors Affecting the Supply of Insurance and Other Financial Services by Microfinance Institutions in Developing Economies. Geneva Papers on Risk and Insurance - Issues and Practice, 2010;35(1):130-160).
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