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LIFE INSURANCE DEVELOPMENT AND ECONOMIC GROWTH: EVIDENCE FROM DEVELOPING COUNTRIES

RELWENDÉ SAWADOGO|SAMUEL GUERINEAU|IDRISSA M. OUEDRAOGO
경제연구소 (Hanyang Economic Research Institute)|2018.06|Journal of Economic Development|제43권 제2호|pp. 1-28|DOI 10.35866/caujed.2018.43.2.001

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키워드

Economic GrowthDeveloping CountriesLife Insurance Market
주제분류경제학

초록

This article examines the relation between the development of life insurance sector and economic growth, for a sample of 86 developing countries over the period 1996-2011. We also examine the heterogeneous effect of life insurance on growth. The results show on the one hand that the development of life insurance has a positive effect on economic growth per capita and, on the other hand, that this effect varies according to the structural characteristics of countries. Thus, the marginal positive impact of the development of life insurance decreases with the levels of deposit interest rate, bank credit and stock market value traded, while the effect is greater in low and middle-income countries and in countries with high-quality institutions. Finally, life insurance effect on growth is less for SSA countries and British legal system countries. These results provide important policy implications for developing countries. Thus, countries will benefit from strengthening their regulatory framework by creating a sound environment that facilitates insurance markets’ development, which further stimulates economic growth.

Abstract

This article examines the relation between the development of life insurance sector and economic growth, for a sample of 86 developing countries over the period 1996-2011. We also examine the heterogeneous effect of life insurance on growth. The results show on the one hand that the development of life insurance has a positive effect on economic growth per capita and, on the other hand, that this effect varies according to the structural characteristics of countries. Thus, the marginal positive impact of the development of life insurance decreases with the levels of deposit interest rate, bank credit and stock market value traded, while the effect is greater in low and middle-income countries and in countries with high-quality institutions. Finally, life insurance effect on growth is less for SSA countries and British legal system countries. These results provide important policy implications for developing countries. Thus, countries will benefit from strengthening their regulatory framework by creating a sound environment that facilitates insurance markets’ development, which further stimulates economic growth.

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