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Do Muslim economies need insurance to grow? Answer from rigorous empirical evidence

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  • Mehmood, Bilal
  • Shahbaz, Muhammad
  • Jiao, Zhilun

Abstract

The insurance industry in the Muslims countries has been making faster growth during the last few decades. The main objective of this paper is to examine the relationship of insurance sector with income per capita in Muslim countries. The countries selected for this analysis are 41 and the time span covered is from 1995 to 2019. The selection of cross-sections and time span is dictated by the availability of data. A number of estimators are used to rigorously analyze the hypothesized relationship, including a couple of the most contemporary macro-panel estimators such as pooled mean group (PMG), common correlated effects mean group (CCEMG), and augmented mean group (AMG). Neutral effect is found for life and non-life insurance penetration on income per capita, which can be attributed to beliefs in Muslim countries. However, we found positive long-run relationship between total insurance activity and income per capita, which can be due to complementarity between life and nonlife insurance activity. The results are found robust after applying robustness checks.

Suggested Citation

  • Mehmood, Bilal & Shahbaz, Muhammad & Jiao, Zhilun, 2023. "Do Muslim economies need insurance to grow? Answer from rigorous empirical evidence," The Quarterly Review of Economics and Finance, Elsevier, vol. 87(C), pages 346-359.
    • Handle: RePEc:eee:quaeco:v:87:y:2023:i:c:p:346-359
    DOI: 10.1016/j.qref.2021.05.006
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