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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 Guerineau

    (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 Guerineau & 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://halshs.archives-ouvertes.fr/halshs-01178838
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    References listed on IDEAS

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    1. Stephen Knack & Philip Keefer, 1995. "Institutions And Economic Performance: Cross-Country Tests Using Alternative Institutional Measures," Economics and Politics, Wiley Blackwell, vol. 7(3), pages 207-227, November.
    2. Keefer, Philip & Knack, Stephen, 2002. "Polarization, Politics and Property Rights: Links between Inequality and Growth," Public Choice, Springer, vol. 111(1-2), pages 127-154, March.
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    4. Knack, Stephen & Keefer, Philip, 1995. "Institutions and Economic Performance: Cross-Country Tests Using Alternative Institutional Indicators," MPRA Paper 23118, University Library of Munich, Germany.
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    7. Feyen, Erik & Lester, Rodney & Rocha, Roberto, 2011. "What drives the development of the insurance sector ? an empirical analysis based on a panel of developed and developing countries," Policy Research Working Paper Series 5572, The World Bank.
    8. Thorsten Beck & Ian Webb, 2003. "Economic, Demographic, and Institutional Determinants of Life Insurance Consumption across Countries," World Bank Economic Review, World Bank Group, vol. 17(1), pages 51-88, June.
    9. Chi-Hung Chang & Chien-Chiang Lee, 2012. "Non-Linearity Between Life Insurance and Economic Development: A Revisited Approach," The Geneva Risk and Insurance Review, Palgrave Macmillan;International Association for the Study of Insurance Economics (The Geneva Association), vol. 37(2), pages 223-257, September.
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    12. Neil Esho & Anatoly Kirievsky & Damian Ward & Ralf Zurbruegg, 2004. "Law and the Determinants of Property-Casualty Insurance," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 71(2), pages 265-283.
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    Cited by:

    1. 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 halshs-01332053, HAL.

    More about this item

    Keywords

    Life insurance; economic development; Institutional Quality; instrumental variable;

    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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