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Does insurance market activity promote economic growth ? Country study for industrial and developing countries

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  • Arena, Marco

Abstract

Insurance market activity, both as a financial intermediary and a provider of risk transfer and indemnification, may contribute to economic growth by allowing different risks to be managed more efficiently and by mobilizing domestic savings. During the past decade, there has been faster growth in insurance market activity, particularly in emerging markets given the process of liberalization and financial integration, which raises questions about its impact on economic growth. The author tests whether there is a causal relationship between insurance market activity (life and nonlife insurance) and economic growth. Using the generalized method of moments for dynamic models of panel data for 56 countries and for the 1976-2004 period, he finds robust evidence of a causal relationship between insurance market activity and economic growth. Both life and nonlife insurance have a positive and significant causal effect on economic growth. High-income countries drive the results in the case of life insurance. On the other hand, both high-income and developing countries drive the results in the case of nonlife insurance.

Suggested Citation

  • Arena, Marco, 2006. "Does insurance market activity promote economic growth ? Country study for industrial and developing countries," Policy Research Working Paper Series 4098, The World Bank.
    • Handle: RePEc:wbk:wbrwps:4098
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    References listed on IDEAS

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    Cited by:

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    2. Sumninder Kaur Bawa & Navjeet Kaur, 2014. "An Analysis of Efficiency-Profitability Relationship," Paradigm, , vol. 18(1), pages 51-72, June.
    3. Michael, Bryane & Hartwell, Christopher A. & Ho, Gary, 2013. "Does Financial Market Development Explain (or at Least Predict) the Demand for Wealth Management and Private Banking Services in Developing Markets?," EconStor Preprints 109960, ZBW - Leibniz Information Centre for Economics.
    4. Rudra P. Pradhan & Saurav Dash & Rana Pratap Maradana & Manju Jayakumar & Kunal Gaurav, 2017. "Insurance market density and economic growth in Eurozone countries: the granger causality approach," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 3(1), pages 1-24, December.
    5. Sabo Mohammed & Junaidu Muhammad Kurawa, 2021. "Board Attributes and Value of Listed Insurance Companies in Nigeria: The Mediating effect of Earnings Quality," International Journal of Management Science and Business Administration, Inovatus Services Ltd., vol. 8(1), pages 7-23, November.

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    Keywords

    Insurance&Risk Mitigation; Economic Theory&Research; Banks&Banking Reform; Financial Intermediation; Non Bank Financial Institutions;
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