Is there a link between economic growth and insurance and banking sector activities in the G-20 countries?

Abstract

Rapid technological development over the last three decades has enabled different sectors of the economy to be seamlessly integrated. This has had an important spill-over impact on the wealth of countries across the globe. In this paper we examine the inter-linkages between the banking sector and the insurance industry on the economic growth of the G-20 countries between 1980 and 2014. Using the vector auto-regression model and the Granger causality test, the study shows that in the long run, developments in the banking sector and insurance industry have had a significant impact on the economic growth of the G-20 countries. In the short term, the inter-relationships between the three factors prove to be more complex in that they differ by countries in different stages of development. Based on the empirical findings, this paper discusses the policies and strategies policy makers and banks and insurance companies should have in place in order to create sustained economic growth in an increasingly inter-connected world.