nep-ias New Economics Papers
on Insurance Economics
Issue of 2011‒07‒21
four papers chosen by
Soumitra K Mallick
Indian Institute of Social Welfare and Business Management

  1. Equilibrium and Strategic Communication in the Adverse Selection Insurance Model By Jaynes, Gerald D.
  2. The relationship between insurance growth and economic development - 80 empirical papers for a review of the literature By J. François Outreville
  3. IMPLEMENTING HEALTH INSURANCE FOR THE POOR: THE ROLLOUT OF RSBY IN KARNATAKA By Erlend Berg; Maitreesh Ghatak; R Manjula; D Rajasekhar; Sanchari Roy
  4. Use of Banking Services in Emerging Markets--Household-Level Evidence By Beck, Thorsten; Brown, Martin

  1. By: Jaynes, Gerald D. (Yale University)
    Abstract: Shows equilibrium always exists (Rothschild-Stiglitz-Wilson model) when firms enforce policy exclusivity via strategic (profit-maximizing) communication of client purchases. Strategic communication induces two equilibrium types: partial communication of purchase information or non-communication which exhibits a lemon effect (low-risk purchase no insurance). Nonetheless, Jaynes' configuration (Jaynes; Beaudry & Poitevin) allocating both risk-types a low-coverage pooling contract and high-risk supplementary expensive coverage always characterizes equilibrium including Perfect Bayesian Equilibrium in Hellwig's two-stage framework where inter-firm informational asymmetries impose additional "competitive" features. Adverse selection induces salient features of financial markets: Bertrand-Edgeworth competition, latent contracts, strategic exclusivity-policy cancellation tactics, market institutions for sharing information.
    JEL: D82 G22
    Date: 2011–05
  2. By: J. François Outreville
    Abstract: The objective is to examine the determinants of the relationship between insurance growth and economic development. This paper contributes to this body of research by providing an extensive literature review of empirical studies that have looked at both sides of the relationship, i.e. the demand side (economic growth is an explanatory variable among other factors that affect the demand) and the development side (insurance is a determinant of growth).
    Keywords: Insurance demand, financial development¸ economic growth.
    JEL: G22 E44 O16
    Date: 2011–07
  3. By: Erlend Berg; Maitreesh Ghatak; R Manjula; D Rajasekhar; Sanchari Roy
    Abstract: The National Health Insurance Scheme (Rashtriya Swasthya Bima Yojana, RSBY) aims to improve poor people's access to quality health care in India. This paper looks at the implementation of the scheme in Karnataka, drawing on a large survey of eligible households and interviews with empanelled hospitals in the state. Six months after initiation, an impressive 85% of eligible households in the sample were aware of the scheme, and 68% had been enrolled. However, the scheme was hardly operational and utilisation was virtually zero. A large proportion of beneficiaries were yet to receive their cards, and many did not know how and where to obtain treatment under the scheme. Moreover, hospitals were not ready to treat RSBY patients. Surveyed hospitals complained of a lack of training and delays in the reimbursement of their expenses. Many were refusing to treat patients under the scheme until the issues were resolved, and others were asking cardholders to pay cash. As is typical for the implementation of a government scheme, many of the problems discussed can be related to a misalignment of incentives.
    Date: 2011–03
  4. By: Beck, Thorsten; Brown, Martin
    Abstract: This paper uses survey data for 60,000 households from 29 transition economies in 2006 and 2010 to explore how the use of banking services is related to household characteristics, as well as to bank ownership, deposit insurance and creditor protection. At the household level we find that the holding of a bank account, a bank card, or a mortgage increases with income and education in most countries and find evidence for an urban-rural gap. The use of banking services is also related to the religion and social integration of a household as well as the gender of the household head. Using the within-country variation between 2006 and 2010, we find that the privatization of state-owned banks and an increase in market share of foreign banks are associated with a stronger use of banking services. Foreign bank ownership is also associated with a higher use of bank services among highincome households and households with formal employment. State ownership, by contrast is hardly associated with more outreach to poorer households. More generous deposit insurance and stronger creditor rights also foster the use of banking services among the urban, rich, better educated and formally employed.
    Keywords: access to finance; bank ownership; creditor protection; deposit insurance; household finance
    JEL: G18 G2 O16 P34
    Date: 2011–07

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