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Does Insurance Matter for Growth: Empirical Evidence from OECD Countries

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  • Lee Chien-Chiang

    () (National Sun Yat-sen University)

Abstract

This paper uses disaggregated data on real insurance premiums, including life and non-life insurance premiums, to examine the interrelationship between insurance markets’ activities and economic growth for 10 selected OECD countries during the up-to-date 1979-2006 period. We take recently developed panel unit-root tests, heterogeneous panel cointegration tests, and panel causality techniques and conclude that there is fairly strong evidence favoring the hypothesis of a long-run equilibrium relationship between real GDP and insurance markets’ activities after allowing for the heterogeneous country effect. The results of the long-run panel regression parameter indicate a significantly positive relationship between real GDP and the activities within the insurance market, while a development from the non-life insurance market has a greater impact on real GDP than the activities in the life insurance market do. By implementing the dynamic panel-based error correction model, we determine that insurance markets’ development and economic growth present both the long-run and short-run bidirectional causalities.

Suggested Citation

  • Lee Chien-Chiang, 2011. "Does Insurance Matter for Growth: Empirical Evidence from OECD Countries," The B.E. Journal of Macroeconomics, De Gruyter, vol. 11(1), pages 1-28, June.
  • Handle: RePEc:bpj:bejmac:v:11:y:2011:i:1:n:18
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    References listed on IDEAS

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    Cited by:

    1. Wanat, Stanisław & Papież, Monika & Śmiech, Sławomir, 2016. "Insurance Market Development and Economic Growth in Transition Countries: Some new evidence based on bootstrap panel Granger causality test," MPRA Paper 69051, University Library of Munich, Germany.
    2. Pradhan, Rudra P. & Arvin, Mak B. & Norman, Neville R., 2015. "Insurance development and the finance-growth nexus: Evidence from 34 OECD countries," Journal of Multinational Financial Management, Elsevier, vol. 31(C), pages 1-22.
    3. Hongbing HU & Meng SU & Wenhua LEE, 2013. "Insurance Activity and Economic Growth Nexus in 31 Regions of China: Bootstrap Panel Causality Test," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 0(3), pages 182-198, October.
    4. Pradhan, Rudra P. & Arvin, B. Mak & Norman, Neville R. & Nair, Mahendhiran & Hall, John H., 2016. "Insurance penetration and economic growth nexus: Cross-country evidence from ASEAN," Research in International Business and Finance, Elsevier, vol. 36(C), pages 447-458.
    5. Lee, Chien-Chiang & Lee, Chi-Chuan & Chiu, Yi-Bin, 2013. "The link between life insurance activities and economic growth: Some new evidence," Journal of International Money and Finance, Elsevier, vol. 32(C), pages 405-427.
    6. repec:gei:journl:v:2:y:2017:i:2:p:130-143 is not listed on IDEAS
    7. repec:jed:journl:v:43:y:2018:i:2:p:1-28 is not listed on IDEAS
    8. Relwende Sawadogo, Samuel Guerineau and Idrissa M. Ouedraogo, 2018. "Life Insurance Development and Economic Growth: Evidence from Developing Countries," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 43(2), pages 1-28, June.
    9. Chun-Ping Chang & Chien-Chiang Lee & Meng-Chi Hsieh, 2011. "Globalization, Real Output and Multiple Structural Breaks," Global Economic Review, Taylor & Francis Journals, vol. 40(4), pages 421-444, December.
    10. repec:spr:empeco:v:52:y:2017:i:4:d:10.1007_s00181-016-1111-7 is not listed on IDEAS
    11. Liu, Guanchun & He, Lei & Yue, Yiding & Wang, Jiying, 2014. "The linkage between insurance activity and banking credit: Some evidence from dynamic analysis," The North American Journal of Economics and Finance, Elsevier, vol. 29(C), pages 239-265.
    12. repec:gei:jnlfer:v:2:y:2017:i:2:p:130-143 is not listed on IDEAS
    13. Mehmet Balcilar & Rangan Gupta & Chien-Chiang Lee & Godwin Olasehinde-Williams, 2018. "Insurance-Growth Nexus in Africa," Working Papers 201801, University of Pretoria, Department of Economics.
    14. repec:jed:journl:v:42:y:2017:i:4:p:23-57 is not listed on IDEAS
    15. Lee, Chien-Chiang & Chiu, Yi-Bin, 2012. "The impact of real income on insurance premiums: Evidence from panel data," International Review of Economics & Finance, Elsevier, vol. 21(1), pages 246-260.

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