ECONOMICS (Dec 2021)
The Innovative Impact of Insurance for Economic Growth: The Evidence from New EU Member States
Abstract
Insurance market activity, both as a financial intermediary and a provider of risk transfer and indemnification, may contribute to economic growth by allowing different risks to be managed more efficiently and by mobilizing domestic savings. During the last decade, there has been faster growth in insurance market activity, particularly in emerging markets given the process of liberalization and financial integration, which raises questions about its impact on economic growth.The aim of this paper is to examine relationship between insurance sector development and economic in 11 new EU member states from CentralandEasternEurope, using annual data fortheperiod 1999-2018. We apply dynamic and fully modified ordinary least squares to estimate the relationship between the variables. The results of our study indicate there are a positive and a significant relationship between insurance, measured through penetration, and economic growth Thus, functions of insurance companies - providing means of risk management and performing mobilization and allocation of resources - are important for economic growth and is in line with previous studies and with our hypothesis These results could be useful for regional governments that seek to improve economic growth as they suggest the need for implementation of stimulative policies for the development of insurance industry
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