Premium
Insurance activity and economic performance: Fresh evidence from asymmetric panel causality tests
Author(s) -
HatemiJ Abdulnasser,
Lee ChiChuan,
Lee ChienChiang,
Gupta Rangan
Publication year - 2018
Publication title -
international finance
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.458
H-Index - 39
eISSN - 1468-2362
pISSN - 1367-0271
DOI - 10.1111/infi.12333
Subject(s) - economics , causality (physics) , per capita , panel data , empirical evidence , gross domestic product , econometrics , macroeconomics , monetary economics , population , physics , demography , quantum mechanics , sociology , philosophy , epistemology
Insurance plays a fundamental role in any modern economy, but the literature has not accounted for the potential asymmetric causal impacts from the dynamic interaction between the insurance market and economic performance. This paper aims to fill this gap by studying the causal relationship between several measures of insurance per capita and real GDP per capita in the G7 countries over the period 1980–2014 via asymmetric panel causality tests. Our results show that insurance market activity and economic performance exhibit bidirectional causalities, but their direction, intensity and significance are different due to distinct market situations. In general, insurance activity plays a passive role in economic performance, while economic performance has a significant role in insurance activity. These findings offer several useful insights for policy makers and researchers.