The Relationship of Insurance and Economic Growth in Europe - A Theoretical and Empirical Analysis
Peter R. Haiss
WU Vienna University of Economics and Business; UniCredit Bank Austria; IES Vienna - Institute for the International Education of Students
affiliation not provided to SSRN
August 5, 2008
Emprica, Journal of Applied Economics and Economic Policy, Vol. 35, 2008
The role of insurance companies, although growing in importance in financial intermediation, has received less attention than bank and stock markets and if so, mainly as a provider of risk transfer in single country or very heterogeneous samples. We investigate both the impact of insurance investment and premiums on GDP growth in Europe. We conduct a cross-country panel data analysis from 1992 to 2005 for 29 European countries. We find a positive impact of life insurance on GDP growth in the EU-15 countries, Switzerland, Norway and Iceland. For the New EU Member States from Central and Eastern Europe, we find a larger impact for liability insurance. Furthermore our findings emphasise the impact of the real interest rate and the level of economic development on the insurance-growth nexus. We argue that the insurance sector needs to be paid more attention in financial sector analysis and macroeconomic policy.
Keywords: Insurance, Financial intermediation, Economic growth, Finance-growth nexus
JEL Classification: E44, G22, O11, O16Accepted Paper Series
Date posted: August 6, 2008 ; Last revised: February 9, 2011
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