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Relationship Between Insurance Market and Economic Growth in the European Union

Author

Listed:
  • Mirela Mitrasević
  • Miloš Pjanić
  • Milijana Novovic Burić

Abstract

This paper examines the relationship between insurance market development and economic growth in EU member states in the period 1998-2018. Our results indicate that there is no causality between premium per capita and GDP per capita growth in the case of 11 out of the 23 analysed countries, including four countries classified as emerging markets. However, in the case of panel data covering all the countries, we determined a two-way causality between insurance market development and economic growth. In the short run, premium per capita has a positive and significant impact on the economic growth as proven in the data panel and in the case of individual countries, except in the case of Ireland and Luxembourg, where the applied model shows only error-correction coefficient values. Besides, our results indicate that premium per capita has a significant positive effect on economic growth in the long run in the case of Belgium, Cyprus, Bulgaria, Romania and Slovenia, i.e., insurance premium is a key determinant of long-term economic growth. The results show a statistically significant long-term positive relationship between premium per capita and GDP growth per capita in the case of a panel analysis of all the observed countries and countries classified as emerging markets. On the other hand, the panel data analysis of the countries classified in the category of developed markets showed a long-term positive relationship, but not a statistically significant one. Since that results indicate that the insurance market development could contribute to ensuring long-term economic stability and growth of observed countries, special attention needs to be paid to the strategy of insurance market development in a changing business environment.

Suggested Citation

  • Mirela Mitrasević & Miloš Pjanić & Milijana Novovic Burić, 2022. "Relationship Between Insurance Market and Economic Growth in the European Union," Politická ekonomie, Prague University of Economics and Business, vol. 2022(4), pages 395-420.
    • Handle: RePEc:prg:jnlpol:v:2022:y:2022:i:4:id:1358:p:395-420
    DOI: 10.18267/j.polek.1358
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    References listed on IDEAS

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    1. Breusch, T S, 1978. "Testing for Autocorrelation in Dynamic Linear Models," Australian Economic Papers, Wiley Blackwell, vol. 17(31), pages 334-355, December.
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    3. Abdul Latif Alhassan, 2016. "Insurance market development and economic growth," International Journal of Social Economics, Emerald Group Publishing Limited, vol. 43(3), pages 321-339, March.
    4. Apergis, Nicholas & Poufinas, Thomas, 2020. "The role of insurance growth in economic growth: Fresh evidence from a panel of OECD countries," The North American Journal of Economics and Finance, Elsevier, vol. 53(C).
    5. Emeka Nkoro & Aham Kelvin Uko, 2016. "Autoregressive Distributed Lag (ARDL) cointegration technique: application and interpretation," Journal of Statistical and Econometric Methods, SCIENPRESS Ltd, vol. 5(4), pages 1-3.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Insurance density; GDP per capita; emerging market; ARDL approach; causality;
    All these keywords.

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies; Actuarial Studies
    • O52 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Europe

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