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Insurance Stock Returns and Economic Growth

Author

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  • Chunyang Zhou

    (Room 502, Antai Building, Antai College of Economics & Management, Shanghai Jiao Tong University, No 535, Fahuazhen Road, Shanghai 200052, China. E-mails: cyzhou@sjtu.edu.cn; cfwu@sjtu.edu.cn)

  • Chongfeng Wu

    (Room 502, Antai Building, Antai College of Economics & Management, Shanghai Jiao Tong University, No 535, Fahuazhen Road, Shanghai 200052, China. E-mails: cyzhou@sjtu.edu.cn; cfwu@sjtu.edu.cn)

  • Donghui Li

    (School of Banking and Finance, Australian School of Business, University of New South Wales, Sydney, NSW 2052, Australia. E-mails: donghui@unsw.edu.au; zhianchen@unsw.edu.au)

  • Zhian Chen

    (School of Banking and Finance, Australian School of Business, University of New South Wales, Sydney, NSW 2052, Australia. E-mails: donghui@unsw.edu.au; zhianchen@unsw.edu.au)

Abstract

In this paper, we propose to use insurance stock returns as an indicator of insurance activities, and apply a dynamic panel technique to examine the link between the role of insurance and economic growth. Our empirical results show that after we control for the variations of market index returns, there is a significantly positive relationship between insurance stock returns and future economic growth. Furthermore, we also investigate how law environment and governance quality affect the link between the role of insurance and economic growth. The empirical results are consistent with our expectation that a well-defined law environment and governance quality facilitate the functioning of insurance companies, and strengthen the role of insurance in economic growth. We find generally that the effect of law and governance on the link between the role of insurance and economic growth is more significant in developed markets than in emerging markets.

Suggested Citation

  • Chunyang Zhou & Chongfeng Wu & Donghui Li & Zhian Chen, 2012. "Insurance Stock Returns and Economic Growth," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 37(3), pages 405-428, July.
    • Handle: RePEc:pal:gpprii:v:37:y:2012:i:3:p:405-428
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    Cited by:

    1. Oberholzer, Basil, 2023. "Post-growth transition, working time reduction, and the question of profits," Ecological Economics, Elsevier, vol. 206(C).
    2. Asatryan, Zareh & Feld, Lars P., 2015. "Revisiting the link between growth and federalism: A Bayesian model averaging approach," Journal of Comparative Economics, Elsevier, vol. 43(3), pages 772-781.
    3. Fletcher, Cameron S. & Ganegodage, K. Renuka & Hildenbrand, Marian D. & Rambaldi, Alicia N., 2022. "The behaviour of property prices when affected by infrequent floods," Land Use Policy, Elsevier, vol. 122(C).

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