Financial aggregation of risks for MSMEs in developing economies: a conceptual framework of financial aggregation and microinsurance effects

Navare, Jyoti and Handley-Schachler, Morrison (2018) Financial aggregation of risks for MSMEs in developing economies: a conceptual framework of financial aggregation and microinsurance effects. In: Research Handbook on Small Business Social Responsibility: Global Perspectives. Spence, Laura J., Frynas, Jedrzej George, Muthuri, Judy and Navare, Jyoti, eds. Research Handbooks in Business and Management series . Edward Elgar, UK, pp. 232-264. 9781784711818. (doi:10.4337/9781784711825.00019)

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Abstract

Business vulnerability is a function of the extent of risks faced and the ability of the business to adapt to adverse changes in circumstances. Financial Aggregation arises out of the link between economic interactions at the micro level and their macro based risks Microbusinesses in developing countries are often highly vulnerable to a range of risks including natural disasters, corruption, poor weather conditions and illness. This vulnerability creates a need for insurance but ability to take out appropriate insurance is frequently limited by financial resources, availability of insurance policies and information on these policies and financial education levels. On the supply side, microinsurers are faced with high marketing and administrative costs and the microinsurance market is further distorted by information asymmetries, adverse selection and moral hazards. This limits interest in the microinsurance market from commercial providers, with microinsurance frequently being available through non-profit agents. This paper investigates the relationship between vulnerability, risk appetite of microbusinesses and their propensity to insure. In building a conceptual framework, we explore the factors that impact financial aggregation and the uptake of microinsurance. We observe additionally that improved financial education and more effective information may help to increase the extent and quality of microinsurance.

Item Type: Book Section
Additional Information: ebook ISBN 9781784711825
Editors: Spence, Laura J. and Frynas, Jedrzej George and Muthuri, Judy and Navare, Jyoti
Research Areas: A. > Business School
Item ID: 23506
Notes on copyright: This is a draft chapter. The final version is available in Research Handbook on Small Business Social Responsibility: Global Perspectives edited by Laura J. Spence, Jedrzej G. Frynas, Judy N. Muthuri and Jyoti Navare, published in 2018, Edward Elgar Publishing Ltd http://dx.doi.org/10.4337/9781784711825.00019 The material cannot be used for any other purpose without further permission of the publisher, and is for private use only.
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Depositing User: Jyoti Navare
Date Deposited: 06 Feb 2018 16:19
Last Modified: 03 Sep 2019 06:54
ISBN: 9781784711818
URI: https://eprints.mdx.ac.uk/id/eprint/23506

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