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Insurance penetration and economic growth in Africa: Dynamic effects analysis using Bayesian TVP-VAR approach

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Abstract

This paper examines the dynamic interactions between insurance and economic growth in eight African countries for the period of 1970–2013. Insurance demand is measured by insurance penetration which accounts for income differences across the sample countries. A Bayesian Time Varying Parameter Vector Auto regression (TVP-VAR) model with stochastic volatility is used to analyze the short run and the long run among the variables of interest. Using insurance penetration as a measure of insurance to economic growth, we find positive relationship for Egypt, while short-run negative and long-run positive effects are found for Kenya, Mauritius, and South Africa. On the contrary, negative effects are found for Algeria, Nigeria, Tunisia, and Zimbabwe. Implementation of sound financial reforms and wide insurance coverage are proposed recommendations for insurance development in the selected African countries.

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  • D.O. Olayungbo & A.E. Akinlo, 2016. "Insurance penetration and economic growth in Africa: Dynamic effects analysis using Bayesian TVP-VAR approach," Cogent Economics & Finance, Taylor & Francis Journals, vol. 4(1), pages 1150390-115, December.
    • Handle: RePEc:taf:oaefxx:v:4:y:2016:i:1:p:1150390
    DOI: 10.1080/23322039.2016.1150390
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    5. 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.
    6. Balcilar, Mehmet & Gupta, Rangan & Lee, Chien-Chiang & Olasehinde-Williams, Godwin, 2018. "The synergistic effect of insurance and banking sector activities on economic growth in Africa," Economic Systems, Elsevier, vol. 42(4), pages 637-648.
    7. Siddharth Kumar & Naresh Chandra Sahu & Pushp Kumar, 2020. "Insurance Consumption and Economic Growth in the Post-Liberalized India: An Empirical Analysis," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 10(2), pages 218-228, February.
    8. Saon Ray, 2020. "India's Insurance Sector: Challenges and Opportunities," Indian Council for Research on International Economic Relations (ICRIER) Working Paper 394, Indian Council for Research on International Economic Relations (ICRIER), New Delhi, India.
    9. Lee, Min-Jae & Choi, Sun-Yong, 2024. "Insights into the dynamics of market efficiency spillover of financial assets in different equity markets," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 641(C).
    10. Gentiana SHARKU & Etleva BAJRAMI, 2021. "Insurance-Economic Growth Nexus - Evidence From Selected Western Balkan'S Countries," Regional Science Inquiry, Hellenic Association of Regional Scientists, vol. 0(2), pages 53-68, June.
    11. Nelson Kemboi Yego & Juma Kasozi & Joseph Nkurunziza, 2021. "A Comparative Analysis of Machine Learning Models for the Prediction of Insurance Uptake in Kenya," Data, MDPI, vol. 6(11), pages 1-17, November.
    12. Enisan, Akinlo Anthony & Taiwo, Akinlo, 2024. "Insurance Development and Economic Growth in Sub-Saharan Africa: Does Institutional Quality Matter?," Journal of Economic Development, The Economic Research Institute, Chung-Ang University, vol. 49(4), pages 71-98, December.
    13. Mehmet Balcilar & Rangan Gupta & Chien-Chiang Lee & Godwin Olasehinde-Williams, 2020. "Insurance-growth nexus in Africa," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 45(2), pages 335-360, April.
    14. Gabriel Armean & Gabriela-Mihaela Muresan, 2017. "Insurance Market Development Before And After The Financial Crisis In The Context Of Ethics And Corruption," Annals - Economy Series, Constantin Brancusi University, Faculty of Economics, vol. 1, pages 191-198, February.
    15. Burmaa Galaa & Enkhamgalan Byambajav & Kai-yin Woo & Amarbayasgalan Myagmar-Ochir & Saruultuya Tsendsuren, 2024. "Long-run relationship between insurance premiums and driving factors in Mongolia," Advances in Decision Sciences, Asia University, Taiwan, vol. 28(2), pages 116-136, June.
    16. Hemrit, Wael & Nakhli, Mohamed Sahbi, 2021. "Insurance and geopolitical risk: Fresh empirical evidence," The Quarterly Review of Economics and Finance, Elsevier, vol. 82(C), pages 320-334.

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