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The dynamic linkage between insurance activities and banking credit: Some new evidence from global countries

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  • Liu, Guanchun
  • Zhang, Chengsi

Abstract

Employing panel cointegration analysis and a panel VAR model with system GMM estimator, this paper investigates the long- and short-run dynamic linkages between insurance activities and banking credit for 45 countries within three income levels from 1980 to 2011. The estimation results indicate that there is a significantly positive cointegration relationship between the two financial sectors in most countries, but the specific relationship varies across income levels and sample periods. The panel Granger causality tests further reveal that there is a bidirectional causality between life insurance activity and banking credit in the high-income group, and a unidirectional causality running from banking credit to life insurance activity in the low-income group, while there is a unidirectional causality running from non-life insurance activity to banking credit in the high-income group. These results indicate that the dynamic interactions between insurance activities and banking credit vary strikingly across different income levels.

Suggested Citation

  • Liu, Guanchun & Zhang, Chengsi, 2016. "The dynamic linkage between insurance activities and banking credit: Some new evidence from global countries," International Review of Economics & Finance, Elsevier, vol. 44(C), pages 40-53.
  • Handle: RePEc:eee:reveco:v:44:y:2016:i:c:p:40-53
    DOI: 10.1016/j.iref.2016.03.002
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    References listed on IDEAS

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    Cited by:

    1. Mehmet Balcilar & Rangan Gupta & Chien-Chiang Lee & Godwin Olasehinde-Williams, 2018. "The Synergistic Effect of Insurance and Banking Sector Activities on Economic Growth in Africa," Working Papers 201818, University of Pretoria, Department of Economics.

    More about this item

    Keywords

    Insurance activity; Banking credit; Panel cointegration;

    JEL classification:

    • E51 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Money Supply; Credit; Money Multipliers
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies; Actuarial Studies
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation

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