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Can Insurance Activity Act as a Stimulus of Economic Growth? Evidence from Time-Varying Causality in China

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  • Deng-Kui Si
  • Xiao-Lin Li
  • Shi-jie Jiang

Abstract

This article investigates the nexus between insurance and economic growth in China with a dynamic interactive mechanism to study different time periods. Using quarterly data from 1999 to 2015, the rolling-window causality test provides evidence of bidirectional causality between insurance activity and economic growth. However, the “supply-leading” pattern tends to dominate the “demand-following” pattern, which implies that in China insurance acts as a stimulus of economic growth during most of the period. Property insurance is more effective than life insurance in stimulating economic growth. Some temporary negative impacts from the development of the insurance sector show that China is in the midst of a transition from a closed economy to a more open economy and policy interventions by the government to liberalize the insurance sector. These findings offer several useful insights for policy makers in transition economies and developing countries.

Suggested Citation

  • Deng-Kui Si & Xiao-Lin Li & Shi-jie Jiang, 2018. "Can Insurance Activity Act as a Stimulus of Economic Growth? Evidence from Time-Varying Causality in China," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 54(13), pages 3030-3050, October.
    • Handle: RePEc:mes:emfitr:v:54:y:2018:i:13:p:3030-3050
    DOI: 10.1080/1540496X.2018.1504766
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    Cited by:

    1. Lee, Chi-Chuan & Lee, Chien-Chiang, 2020. "Insurance activity, real output, and geopolitical risk: Fresh evidence from BRICS," Economic Modelling, Elsevier, vol. 92(C), pages 207-215.
    2. Xunfa Lu & Zhitao Ye & Kin Keung Lai & Hairong Cui & Xiao Lin, 2022. "Time-Varying Causalities in Prices and Volatilities between the Cross-Listed Stocks in Chinese Mainland and Hong Kong Stock Markets," Mathematics, MDPI, vol. 10(4), pages 1-19, February.
    3. Guochen PAN & Tsangyao CHANG & Mei-Chih WANG & Mengqi LIU & Iuliana Carmen BĂRBĂCIORU, 2023. "Reassessing the Nexus between Insurance Activities and Economic Growth in China Through Quantile Approaches," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 0(4), pages 57-71, December.

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