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Does Insurance Development Affect Financial Market in Developing Countries?

Author

Listed:
  • Relwende Sawadogo

    (CERDI - Centre d'Études et de Recherches sur le Développement International - UCA [2017-2020] - Université Clermont Auvergne [2017-2020] - CNRS - Centre National de la Recherche Scientifique)

  • Samuel Guérineau

    (CERDI - Centre d'Études et de Recherches sur le Développement International - UCA [2017-2020] - Université Clermont Auvergne [2017-2020] - CNRS - Centre National de la Recherche Scientifique)

Abstract

This paper investigates the impact of insurance on stock market development in 37 developing countries over the period 1987-2011. By controlling for the potential endogeneity bias by System GMM estimator, we show that the insurance premiums significantly increase the stock market value traded. This result is robust to the use of alternative measure of stock market development and control of the political and legal system quality. In addition, the results highlight that an improvement in property rights promotes the deepening of the financial market. Thus, the results argue for insurance policies promoting and an improvement of the legal environment to benefit from the financial market development.

Suggested Citation

  • Relwende Sawadogo & Samuel Guérineau, 2016. "Does Insurance Development Affect Financial Market in Developing Countries?," Post-Print hal-01687498, HAL.
    • Handle: RePEc:hal:journl:hal-01687498
    DOI: 10.5296/ifb.v3i1.9533
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    More about this item

    Keywords

    Stock market; Insurance premiums; Developing countries; Panel data;
    All these keywords.

    JEL classification:

    • G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies; Actuarial Studies
    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)

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