Insurance–growth nexus: empirical evidence from emerging Asian markets

Abstract

This study examines the drivers of insurance market growth and causality between insurance and economic growth using a dynamic one-step system GMM estimator and panel Granger causality test on the sample of 19 emerging Asian economies over the period 2007-2017. Several macro-economic factors influence the development of the insurance market but the magnitude of effects varies between high and middle-income countries and types of insurance growth proxies used. On examining the causality between insurance and economic growth, the result of the Granger causality test shows that unidirectional causality is running from economic growth to the insurance sector supporting demand leading framework of insurance growth literature. The study suggests that higher economic activities with regulated price levels, higher banking activities with credit rationing and more outreach programmes are contributing to insurance sector growth. Therefore, policymakers should stimulate economic activities of the country to boost insurance growth.