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Does insurance promote economic growth: A comparative study of developed and emerging/developing economies

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  • Sajid Mohy Ul Din
  • Arpah Abu-Bakar
  • Angappan Regupathi

Abstract

This paper examines the relationship between insurance and economic growth in 20 countries for the period 2006–2015. Insurance activity is measured through three distinctive proxies such as net written premiums, penetration and density. The Hausman statistics confirmed that fixed effect model is appropriate for this data-set. This study found a positive and a significant relationship between life insurance, measured through net written premiums and density, and economic growth for developed countries while the same is true for developing countries when insurance is measured through penetration proxy. The results also reveal that non-life insurance has statistically significant, for all three proxies, relationship with economic growth for developing countries whereas, in case of developed countries, the results are only significant when insurance density is used as a proxy for insurance. Moreover, the role of non-life insurance is more significant for developing countries as compared to developed countries.

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  • Sajid Mohy Ul Din & Arpah Abu-Bakar & Angappan Regupathi, 2017. "Does insurance promote economic growth: A comparative study of developed and emerging/developing economies," Cogent Economics & Finance, Taylor & Francis Journals, vol. 5(1), pages 1390029-139, January.
    • Handle: RePEc:taf:oaefxx:v:5:y:2017:i:1:p:1390029
    DOI: 10.1080/23322039.2017.1390029
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    2. Chakraborty, Kalyan, 2020. "Development of financial market activities and economic growth: A cross-country evidence," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 60, pages 26-47.
    3. Apergis, Nicholas & Poufinas, Thomas, 2020. "The role of insurance growth in economic growth: Fresh evidence from a panel of OECD countries," The North American Journal of Economics and Finance, Elsevier, vol. 53(C).
    4. J. François Outreville, 2021. "Insurance and foreign direct investment: a review (or lack) of evidence," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 46(2), pages 236-247, April.
    5. Siddharth Kumar & Naresh Chandra Sahu & Pushp Kumar, 2020. "Insurance Consumption and Economic Growth in the Post-Liberalized India: An Empirical Analysis," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 10(2), pages 218-228, February.
    6. Li, Xiaolong & Ozturk, Ilhan & Ullah, Sana & Andlib, Zubaria & Hafeez, Muhammad, 2022. "Can top-pollutant economies shift some burden through insurance sector development for sustainable development?," Economic Analysis and Policy, Elsevier, vol. 74(C), pages 326-336.
    7. Gengnan Chiang & Chin-Chi Liu & Hui-Hsuan Liu, 2022. "The Threshold Effect of Regulatory Quality on the Relationship between Financial Development and Economic Growth: Evidence from Asian Countries," Advances in Management and Applied Economics, SCIENPRESS Ltd, vol. 12(1), pages 1-6.
    8. Costache Bianca, 2018. "Analysis Of The Impact Of Insurance Sector On Total Investments In Romania," Annals - Economy Series, Constantin Brancusi University, Faculty of Economics, vol. 5, pages 50-58, October.
    9. Ben Kajwang, 2022. "Effects of training and development practices on performance of insurance sector in Kenya," International Journal of Research in Business and Social Science (2147-4478), Center for the Strategic Studies in Business and Finance, vol. 11(4), pages 140-148, June.
    10. Dr. Fentaw Leykun, 2020. "Insurance Market Development, Financial Service Export and Economic Growth: Evidence from East African Countries," International Journal of Finance, Insurance and Risk Management, International Journal of Finance, Insurance and Risk Management, vol. 10(1), pages 57-98.

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