Can Insurance Activity Act as a Stimulus of Economic Growth? Evidence from Time-Varying Causality in China

Deng-Kui Si, Xiao-Lin Li and Shi-jie Jiang

Emerging Markets Finance and Trade, 2018, vol. 54, issue 13, 3030-3050

Abstract: This article investigates the nexus between insurance and economic growth in China with a dynamic interactive mechanism to study different time periods. Using quarterly data from 1999 to 2015, the rolling-window causality test provides evidence of bidirectional causality between insurance activity and economic growth. However, the “supply-leading” pattern tends to dominate the “demand-following” pattern, which implies that in China insurance acts as a stimulus of economic growth during most of the period. Property insurance is more effective than life insurance in stimulating economic growth. Some temporary negative impacts from the development of the insurance sector show that China is in the midst of a transition from a closed economy to a more open economy and policy interventions by the government to liberalize the insurance sector. These findings offer several useful insights for policy makers in transition economies and developing countries.

Date: 2018
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Persistent link: https://EconPapers.repec.org/RePEc:mes:emfitr:v:54:y:2018:i:13:p:3030-3050

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DOI: 10.1080/1540496X.2018.1504766

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