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

Akinlo, Taiwo; Apanisile, Olumuyiwa Tolulope

doi:10.4236/me.2014.52014

Cited by 55 publications

(65 citation statements)

References 10 publications

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“…Second, while empirical studies on the relationship between economic development and life insurance have focused on both developed and developing countries (Ward & Zurbruegg, 2000;Arena, 2008;Chang & Lee, 2012;Chen et al, 2012;Lee et al, 2013aLee et al, , 2013bSawadogo et al, 2018), the positioning of this study is specifically in the space of contemporary Africacentric literature because this articulates how its positioning departs from attendant Africacentric studies. Hence, as critically engaged in Section 2, the extant literature on insurance consumption in Africa has focused on two main strands, notably: nexuses between the penetration of insurance and economic development (Ioncică et al, 2012;Akinlo, 2015;Alhassan & Biekpe, 2015 and factors that determine insurance penetration (Zerriaa et al, 2017;Guerineau & Sawadogo, 2015;Alhassan & Biekpe, 2016b). This research is closest to the former strand, and unfortunately, studies in the attendant strand have a common shortcoming of not clearly articulating thresholds of insurance penetration at which further consumption of insurance enhances economic prosperity.…”

Section: Introductionmentioning

confidence: 99%

Insurance Policy Thresholds for Economic Growth in Africa

Asongu

Odhiambo

2019

SSRN Journal

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This study investigates the role of insurance in economic growth on a panel of forty-eight countries in Africa for the period 2004-2014. The research question the study seeks to answer is the following: what thresholds of insurance penetration positively affect economic growth in Africa? The empirical evidence is based on Generalized Method of Moments. Life insurance increases economic growth while the effect of non-life insurance is not significant. Increasing both life insurance and non-life insurance has negative net effects on economic growth. From an extended analytical exercise, 4.149 of life insurance premium (% of GDP) is the minimum critical mass required for life insurance to positively affect economic prosperity while 1.805 of non-life insurance premium (% of GDP) is the minimum threshold required for non-life insurance to positively affect economic prosperity. Thresholds are also provided from the Hansen (1999) Panel Threshold Regression technique using a balanced sample of 28 countries.

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Section: Introductionmentioning

confidence: 99%

Insurance Policy Thresholds for Economic Growth in Africa

Asongu

Odhiambo

2019

SSRN Journal

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“…In the second strand, Alhassan and Biekpe (2015) Akinlo (2015) has investigated causal nexuses between insurance and economic growth in 33 countries in SSA for the period 1995-2011. Using panel data with an estimation approach that accounts for heterogeneity, the results show evidence of bidirectional causality between economic growth and insurance penetration.…”

Section: Literaure Review On Insurancementioning

confidence: 99%

Information Technology, Governance and Insurance in Sub-Saharan Africa

Asongu

Nnanna²,

Acha-Anyi

2019

SSRN Journal

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Purpose -This study investigates the role of ICT in modulating the effect of governance on insurance penetration in 42 sub-Saharan African countries using data for the period 2004-2014.Design/methodology/approach -Two insurance indicators are used in the analysis, namely: life insurance and non-life insurance. The three ICT modulating dynamics employed include: mobile phone penetration, internet penetration and fixed broadband subscriptions. Six governance channels are also considered, namely: political stability, "voice & accountability", regulation quality, government effectiveness, the rule of law and corruption-control. The empirical evidence is based on generalized method of moments.Findings -The following main findings are established. First, mobile phone penetration does not significantly modulate governance channels to positively affect life insurance while it effectively complements "voice & accountability" to induce a positive net effect on non-life insurance. Second, internet penetration complements: (i) governance dynamics of political stability, government effectiveness and rule of law to induce positive net effects on life insurance: and (ii) corruption-control for an overall positive effect on non-life insurance. Third, the relevance of fixed broadband subscriptions in promoting life insurance is apparent via governance channels of regulation quality, government effectiveness and the rule of law while fixed broadband subscriptions do not induce significant overall net effects on non-life insurance though the conditional effects are overwhelmingly significant.Orginality/value -To the best our knowledge, studies on the relevance of ICT in promoting insurance consumption through governance channels are sparse, especially for a region such as sub-Saharan Africa where insurance penetration is low compared to other regions of the world. JEL Classification: G20; I28; I30; L96; O55

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“…High deposit interest rates encourage saving and thus providing commercial banks with deposit inflows well beyond their required reserve ratios. This enables banks to lend out for investment purposes, which ultimately leads to economic growth (Akinlo and Apanisile, 2014). Inflation is included because of its influence on aggregate demand.…”

Section: Theoretical Modelmentioning

confidence: 99%

Insurance - Economic Growth Nexus: Evidence from Botswana

Oitsile

Galebotswe

Sekwati

2018

Asian Economic and Financial Review

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Article HistoryThe paper investigates the influence of insurance penetration on economic growth in Botswana for the period 1994-2013. Using the autoregressive distributed lag (ARDL) bounds test approach to Cointegration by Pesaran et al. (2001) the study finds a negative long-run relationship between insurance penetration and economic growth. This suggests that the recent rapid expansion of the insurance sector could be hurting the economy's long-run growth. We contend that this finding could reflect a savingsubstitution effect in which insurance assets mobilized locally are invested abroad. However, the effect is economically small and statistically significant only at the 10 percent level. Furthermore, there is no evidence that insurance penetration affects growth in the short-run. Nonetheless we argue that there is a need to pay more attention to the insurance sector in financial sector policy analysis, lest it becomes a significant leakage of funds from the income-expenditure stream. Contribution/ Originality:This study contributes to the existing literature on the insurance-growth relationship. The study uses the autoregressive distributed lag (ARDL) bounds test approach to Cointegration to estimate the impact of insurance penetration on the economic growth of Botswana. It is the first study to gauge the quantitative effect of insurance sector development on Botswana's economic growth.

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

Cited by 55 publications

References 10 publications

Insurance Policy Thresholds for Economic Growth in Africa

Insurance Policy Thresholds for Economic Growth in Africa

Information Technology, Governance and Insurance in Sub-Saharan Africa

Insurance - Economic Growth Nexus: Evidence from Botswana

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