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On the determinants of life insurance development in Sub-Saharan Africa: the role of the institutions quality in the effect of economic development

Author

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  • Samuel Guérineau

    (CERDI - Centre d'Études et de Recherches sur le Développement International - UdA - Université d'Auvergne - Clermont-Ferrand I - CNRS - Centre National de la Recherche Scientifique)

  • Relwende Sawadogo

    (CERDI - Centre d'Études et de Recherches sur le Développement International - UdA - Université d'Auvergne - Clermont-Ferrand I - CNRS - Centre National de la Recherche Scientifique)

Abstract

This paper analyzes the determinants of life insurance development on a panel of 20 countries in sub-Saharan Africa over the period 1996-2011. It also highlights the role of the institutions quality on the effect of economic development on the life insurance. Controlling for the presence of a possible endogeneity bias using the instrumental variable technique, we find evidence that increased of per capita income leads to an increase in life insurance premiums. We show that the life insurance is a luxury good in SSA. The demographic variables such as life expectancy and the young dependency ratio influence negatively the life insurance development while the old dependency ratio has a positive effect. We also find that the protection of property rights and the government stability are positively associated to life insurance. The results are robust to the introduction of more variables. Furthermore, the marginal impact of the income per capita on the life insurance varies according to the quality of the legal and political environment. Finally, the marginal effect of the economic development on life insurance is less for french legal system countries compared to non-french legal system countries.

Suggested Citation

  • Samuel Guérineau & Relwende Sawadogo, 2015. "On the determinants of life insurance development in Sub-Saharan Africa: the role of the institutions quality in the effect of economic development," Working Papers halshs-01178838, HAL.
    • Handle: RePEc:hal:wpaper:halshs-01178838
    Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-01178838
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    References listed on IDEAS

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    1. Simplice A. Asongu & Nicholas M. Odhiambo, 2020. "Insurance Policy Thresholds for Economic Growth in Africa," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 32(3), pages 672-689, July.
    2. Simplice A. Asongu & Nicholas M. Odhiambo, 2021. "Information Asymmetry and Insurance in Africa," Journal of African Business, Taylor & Francis Journals, vol. 22(3), pages 394-410, July.
    3. Simplice Asongu & Nicholas M. Odhiambo, 2020. "Financial access, governance and insurance sector development in sub-Saharan Africa," Journal of Economic Studies, Emerald Group Publishing Limited, vol. 47(4), pages 849-875, February.
    4. Simplice A. Asongu & Nicholas M. Odhiambo, 2019. "Enhancing ICT for insurance in Africa," Review of Development Finance Journal, Chartered Institute of Development Finance, vol. 9(2), pages 16-27.
    5. Simplice Asongu & Joseph Nnanna & Paul Acha-Anyi, 2019. "Information technology, governance and insurance in Sub-Saharan Africa," Social Responsibility Journal, Emerald Group Publishing Limited, vol. 16(8), pages 1253-1273, September.
    6. Simplice A. Asongu, 2020. "Technology, Education, Life and Non-life Insurance in Africa," International Journal of Public Administration, Taylor & Francis Journals, vol. 43(11), pages 915-925, August.
    7. Simplice A. Asongu & Nicholas M. Odhiambo, 2020. "Insurance and Inequality in Sub-Saharan Africa: Policy Thresholds," Working Papers of the African Governance and Development Institute. 20/005, African Governance and Development Institute..
    8. Odunayo Olarewaju & Thabiso Msomi, 2021. "Determinants of Insurance Penetration in West African Countries: A Panel Auto Regressive Distributed Lag Approach," JRFM, MDPI, vol. 14(8), pages 1-15, July.
    9. Rajat Deb & Kanchan Kumar Nath & Mukesh Nepal & Sourav Chakraborty & Kiran Sankar Chakraborty, 2021. "Do People Choose Life Insurance for Protection or for Saving?," Metamorphosis: A Journal of Management Research, , vol. 20(1), pages 35-44, June.
    10. Simona Laura Dragoş & Codruţa Mare & Cristian Mihai Dragoş, 2019. "Institutional drivers of life insurance consumption: a dynamic panel approach for European countries," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 44(1), pages 36-66, January.
    11. Noureddine BERBER, Djilali BELAIDOUNI & Fatma Zohra BOUGHAR, 2024. "Determinants of Individuals’ Demand for Service Products. Sample of Algerian Insurance Companies Clients," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 8(1), pages 1588-1604, January.
    12. Rajat Deb & Deep Deb & Kiran Sankar Chakraborty, 2022. "Spousal roles in life insurance demands," DECISION: Official Journal of the Indian Institute of Management Calcutta, Springer;Indian Institute of Management Calcutta, vol. 49(1), pages 3-11, March.
    13. Yilmaz Bayar & Marius Dan Gavriletea & Dan Constantin Danuletiu & Adina Elena Danuletiu & Emre Sakar, 2022. "Pension Funds, Insurance Companies and Stock Market Development: Evidence from Emerging Markets," Mathematics, MDPI, vol. 10(13), pages 1-13, July.
    14. Mmakgabo Pinkie Segodi & Athenia Bongani Sibindi, 2022. "Determinants of Life Insurance Demand: Empirical Evidence from BRICS Countries," Risks, MDPI, vol. 10(4), pages 1-14, April.
    15. Jean-François BRUN & Maïmouna DIAKITE, 2016. "Tax Potential and Tax Effort: An Empirical Estimation for Non-resource Tax Revenue and VAT’s Revenue," Working Papers 201610, CERDI.

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    More about this item

    Keywords

    Life insurance; economic development; Institutional Quality; instrumental variable;
    All these keywords.

    JEL classification:

    • C26 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Instrumental Variables (IV) Estimation
    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies; Actuarial Studies

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