Global economy

Insurance Market Activity Promote Economic Growth

Posted on February 28, 2014 | in Insurance | by
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Insurance market activity, both as a provider of risk transfer and indemnification, may put up to economic growth by allowing different types of risks to be controlled more efficiently and by mobilizing domestic savings. During the past decade, there has been faster outgrowth in insurance market activity, particularly in emerging markets given the process of liberalization and financial integration, which increases questions about its influence on economic growth. The author tests whether there is a causal relationship between insurance market activity (life and non-life insurance) and economic growth. Using the generalized method of moments for dynamic models of panel info 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 non-life and life insurance have a positive and substantial causal effect on economic growth. The results were driven in the case of life insurance by high-income countries. On the other hand, both developing countries and high-income drive the results in the case of non-life insurance.

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