Does the insurance sector really matter for economic growth? Evidence from Central and Eastern European countries
Abstract
This paper analyses the impact of insurance sector development on economic growth based on a sample that includes 14 Central and Eastern European (CEE) post-transition countries for a period of 19 years, from 1998 to 2016. Considering the presence of cross-section dependence and multiple structural breaks, recently developed panel econometric techniques were employed and led to the following conclusions: (1) life insurance has no significant effect on economic growth in both panel and individual countries, (2) non-life insurance positively affects economic growth in both panel and individual countries, (3) Dumitrescu and Hurlin causality test indicates a unidirectional causality running from economic growth to both life and non-life insurance and infers the absence of causal connection between life and non-life insurance and economic growth.
Keyword : insurance sector, life insurance penetration, non-life insurance penetration, economic growth, Central and Eastern Europe, multiple structural breaks, panel cointegration, causality
How to Cite
Bayar, Y., Dan Gavriletea, M., & Danuletiu, D. C. (2021). Does the insurance sector really matter for economic growth? Evidence from Central and Eastern European countries. Journal of Business Economics and Management, 22(3), 695-713. https://doi.org/10.3846/jbem.2021.14287
This work is licensed under a Creative Commons Attribution 4.0 International License.
References
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Demirci, Ş. D., & Zeren, F. (2017). Insurance premium and economic growth: Evidence from OECD countries. İşletme Bilimi Dergisi, 5(1), 1–11. https://doi.org/10.22139/jobs.286819
Din, S. M. U., Abu-bakar, A., & Regupathi, A. (2017). Does insurance promotes economic growth: A comparative study of developed and emerging/developing economies. Cogent Economics & Finance, 5(1), 1390029. https://doi.org/10.1080/23322039.2017.1390029
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Durusu-Ciftci, D., Ispir, M. S., & Yetkiner, H. (2017). Financial development and economic growth: Some theory and more evidence. Journal of Policy Modeling, 39(2), 290–306. https://doi.org/10.1016/j.jpolmod.2016.08.001
Guochen, P., & Wei, S. C. (2012, July 18–21). The relationship between insurance development and economic growth: A cross-region study for China [Conference presentation]. 2012 China International Conference on Insurance and Risk Management, Qingdao. http://www.ccirm.org/conference/2012/uploadfiles/A/II-A/4-PANGuochen_Pan_full_text_.pdf
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Guru, B. K., & Yadav, I. S. (2019). Financial development and economic growth: Panel evidence from BRICS. Journal of Economics, Finance and Administrative Science, 24(47), 113–126. https://doi.org/10.1108/JEFAS-12-2017-0125
Haiss, P., & Sumegi, K. (2008). The relationship between insurance and economic growth: Review and agenda. The IcFai Journal of Risk and Insurance, 5(2), 32–56.
Han, L., Li, D., Moshirian, F., & Tian, Y. (2010). Insurance development and economic growth. Geneva Papers on Risk Insurance – Issues and Practice, 35(2), 183–199. https://doi.org/10.1057/gpp.2010.4
Hicks, J. R. (1969). A theory of economic history. Oxford University Press.
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Jayakumar, M., Pradhan, R. P., Dash, S., Maradana, R. P., & Gaurav, K. (2018). Banking competition, banking stability, and economic growth: Are feedback effects at work? Journal of Economics and Business, 96, 15–41. https://doi.org/10.1016/j.jeconbus.2017.12.004
Kessler, D., Montchalin, A. de, & Thimann, Ch. (2016). Insurance and economic development: Growth, stabilization and distribution (Paper no. 46). International Labour Organization (ILO). https://www.ilo.org/wcmsp5/groups/public/---ed_emp/documents/publication/wcms_613701.pdf
Kugler, M., & Ofoghi, R. (2005, September 3). Does insurance promote economic growth? Evidence from the UK [Conference presentation]. Money Macro and Finance (MMF) Research Group Conference, Money Macro and Finance Research Group.
Ledhem, M. A., & Mekidiche, M. (2020). Economic growth and financial performance of Islamic banks: A CAMELS approach. Islamic Economic Studies, 28(1), 47–62.
Levine, R., & Zervos, S. (1998). Stock markets, banks, and economic growth. American Economic Review, 88(3), 537–558. https://econpapers.repec.org/article/aeaaecrev/v_3a88_3ay_3a1998_3ai_3a3_3ap_3a537-58.htm
Liang, H.-Y., & Reichert, A. (2006). The relationship between economic growth and banking sector development. Banks and Bank Systems, 2(1), 19–35. https://www.businessperspectives.org/images/pdf/applications/publishing/templates/article/assets/1540/BBS_en_2006_02_Liang.pdf
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Munich RE. (2018). Insurance market outlook for 2018/2019. https://www.munichre.com/topics-online/en/economy/insurance-markets/outlook-2018-2019.html
Njegomir, V., & Stojić, D. (2010). Does insurance promote economic growth: The evidence from ExYugoslavia region. Ekonomska Misao I Praksa, 1, 31–48. https://hrcak.srce.hr/54655
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