Insurance and Growth

The Geneva Papers, 2010, 35, (183–199) r 2010 The International Association for the Study of Insurance Economics 1018-5895/10 www.palgrave-journals.com/gpp/ Insurance Development and Economic Growth*
Liyan Hana, Donghui Lib, Fariborz Moshirianb and Yanhui Tiana a School of Economics & Management, Beihang University, Beijing, China.
School of Banking and Finance, The University of New South Wales, Sydney, Australia.
E-mail: [e-mail] b This paper investigates the relationship between insurance development and economic growth by employing GMM models on a dynamic panel data set of 77 economies for the period 1994–2005. Insurance density is used to measure the development of insurance.
Controlled by a simple conditioning information set and a policy information set, we can draw a conclusion that insurance development is positively correlated with economic growth.
The sample is then divided into developed and developing economies. For the developing economies, the overall insurance development, life insurance and non-life insurance development play a much more important role than they do for the developed economies.
The Geneva Papers (2010) 35, 183–199. doi:10.1057/gpp.2010.4
Keywords: insurance development; economic growth; dynamic panel data

Introduction
There has been a great interest in the role of financial institutions in economic growth.
Economists refer to some work of researchers in the late 19th and early 20th centuries who discussed the significance of finance for economic growth. In recent times, a number of studies have analysed various issues with respect to the role of the banking sector in economic growth. The most prominent studies have been conducted by Levine and his colleagues. For instance, King and Levine1 demonstrated the connection between bank development and economic growth, which was confirmed by later studies such as Levine,
Beck et al., Levine et al., Rousseau and Wachtel, and Beck and Levine.2

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