Relationship between Insurance and Economic Growth in Sub-Saharan African: A Panel Data Analysis

Taiwo Akinlo,Olumuyiwa Tolulope Apanisile

doi:10.4236/me.2014.52014

Abstract

This study examined the relationship between insurance and economic growth in sub-Saharan Africa over the period 1986-2011. Pooled OLS, Fixed Effect Model and Generalized Method of Moment Panel Model were employed in the estimation. The estimations of the dynamic panel-data results show that insurance has positive and significance impact on economic growth in sub-Saharan Africa. This shows that premium contributes to economic growth in sub-Saharan Africa which means that a well-developed insurance sector is necessary for the economic development, as it provides long-term investments for economic growth and simultaneously strengthening risk-taking abilities. The results also show that human capita has positive significant impact on economic growth. Openness and interest rate have negative and statistical significant on economic growth.

Highlights

The importance of insurance in trade and development was recognized in the first conference of UNCTAD (1964) where a statement that “a sound National Insurance and reinsurance market is an essential characteristic of economic growth” was made
This shows that premium contributes to economic growth in sub-Saharan Africa which means that a well-developed insurance sector is necessary for the economic development, as it provides long-term investments for economic growth and simultaneously strengthening risk-taking abilities
The aim of this study is to examine the relationship between insurance and economic growth in sub-Sahara Africa from 1986-2011

Summary

Introduction

The importance of insurance in trade and development was recognized in the first conference of UNCTAD (1964) where a statement that “a sound National Insurance and reinsurance market is an essential characteristic of economic growth” was made. The importance of the relationship between financial development and economic growth has been well recognized and emphasized in the field of economic development [1]. Financial development is considered as an essential ingredient in any conscious effort to enhance economic development and growth. Recent writings on this subject seem to accept the hypothesis that financial development is crucial for successful economic growth [1].

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Conclusion