The relationship between insurance and banking sectors in Sub-Saharan African: Does globalization matter?

Abstract

This paper analyses the link between bank credit to private sector and insurance (life, non-life, and total insurance) activity and the role of globalization level in this relationship. To do this, we estimated with PMG estimator on a sample of 20 countries of Sub-Saharan African (SSA) over the period from 1990 to 2017. The empirical results indicate the real banking credit density is positively associated with the development of life insurance and total insurance activity, even after controlling for the effect of other determinants of insurance (life and non-life) density. Furthermore, the level of globalization is found to have a favourable effect on the extent to which banking credit influences the development of insurance activity, suggesting that the globalization is an opportunity to accelerate the development of insurance sector in SSA.