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Influence of Macroeconomics Factors and Legal Stability to the Insurance Growth in the ASEAN-5 Countries

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  • Lee, Hui Shan

    (Universiti Tunku Abdul Rahman Malaysia Bandar Sungai Long, 43000 Kajang Selangor MALAYSIA and Universiti Putra Malaysia 43400 Serdang Selangor MALAYSIA)

  • Cheng, Fan Fah

    (Universiti Putra Malaysia 43400 Serdang Selangor MALAYSIA)

  • Chong, Shyue Chuan

    (Universiti Tunku Abdul Rahman Malaysia Bandar Sungai Long, 43000 Kajang Selangor MALAYSIA)

  • Sia, Bik Kai

    (Universiti Tunku Abdul Rahman Malaysia Bandar Sungai Long, 43000 Kajang Selangor MALAYSIA)

Abstract

This paper examines the influence of legal stability and macroeconomics factor to the non-life insurance development. In light of the growing significance of foreign direct investment (FDI) and trade that stimulate insurance sector, and the stress placed on legal stability of the countries, investigating the role of legal stability is crucial to sustain a country’s financial development. This study employs a panel data analysis spanning 20 years in the selected developing countries. The findings suggest that higher trade, higher income, higher stock market trading activities and higher availability of finance credit will enhance the non-life insurance development. Legal stability such as enhancement on the property right and government integrity will improve the non-life insurance development. When the legal environments in emerging countries are more stable, the FDI and stocks market will become more encouraging and stimulate non-life insurance development. The policy makers should improve the legal stability in emerging countries to improve the financial development for minimizing the gap with developed countries. This study includes the institutional factors components in addition to the macroeconomics factors could provide a complete picture towards the improvement of non-life insurance development in emerging and transition countries.

Suggested Citation

  • Lee, Hui Shan & Cheng, Fan Fah & Chong, Shyue Chuan & Sia, Bik Kai, 2018. "Influence of Macroeconomics Factors and Legal Stability to the Insurance Growth in the ASEAN-5 Countries," Jurnal Ekonomi Malaysia, Faculty of Economics and Business, Universiti Kebangsaan Malaysia, vol. 52(2), pages 219-229.
    • Handle: RePEc:ukm:jlekon:v:52:y:2018:i:2:p:219-229
    DOI: http://dx.doi.org/10.17576/JEM-2018-5202-18
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    References listed on IDEAS

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