Does Insurance Market Activity Promote Economic Growth ? [electronic resource] : Country Study for Industrial and Developing Countries / Arena, Marco

By: Arena, MarcoContributor(s): Arena, MarcoMaterial type: TextTextPublication details: Washington, D.C., The World Bank, 2006Description: 1 online resource (22 p.)Subject(s): Bank Policy | Banking Sector | Banks and Banking Reform | Bond | Debt Markets | Developing Countries | Economic Theory and Research | Emerging Markets | Exchange | Finance and Financial Sector Development | Financial Intermediation | Financial Literacy | Financial Systems | Insurance | Insurance and Risk Mitigation | Insurance Law | Insurance Market | Insurance Markets | Insurance Premiums | Investment | Investment Decisions | Law and Development | Life Insurance | Life Insurance Premiums | Macroeconomics and Economic Growth | Potential Investments | Private Sector Development | Productive Investments | Stock | Stock Market | Stock Market DevelopmentAdditional physical formats: Arena, Marco.: Does Insurance Market Activity Promote Economic Growth ?Online resources: Click here to access online 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.
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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.

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