Insurance sector development and economic growth: evidence from south Africa.
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Authors
Sibindi, A.B.
Godi, Ntwanano Jethro
Issue Date
2014
Type
Article
Language
en
Keywords
Insurance Sector Development, , Economic growth, , Granger Causality, , South Africa
Alternative Title
Abstract
Arguably the insurance sector may contribute to economic growth by its very mechanism of risk transfer and thereby providing indemnity as well as by the intermediation role it plays in the economy. Insurance can also be used as a vehicle of savings mobilisation. In this article we investigate the causal relationship between the insurance sector (long-term, short-term and total insurance) and economic growth in South Africa for the period 1990 to 2012. We make use of insurance density as the proxy for insurance market development and real per capita growth domestic product as the proxy for economic growth. We then test for cointegration amongst the variables by applying the Johansen procedure and then test for Granger causality based on the vector error correction model (VECM). Our results confirm the existence of at least one cointegrating relationship and also indicate that the direction of causality runs from the economy to the long-term insurance, as well as from the economy to the total insurance sector. This is consistent with the ‘demand-following’ insurance-growth hypothesis.
Description
Citation
Sibindi, A.B. & Godi, N.J. (2014).Insurance sector development and economic growth: evidence from south Africa. Journal of corporate ownership & control,11(4) , pp. 530-538
Publisher
License
Journal
Volume
Issue
PubMed ID
DOI
ISSN
1727-9232