Insurance market development and economic growth

2016 ◽  
Vol 43 (3) ◽  
pp. 321-339 ◽  
Author(s):  
Abdul Latif Alhassan
Keyword(s):  
Economic Growth ◽  
South Africa ◽  
Causal Relationship ◽  
Time Series Data ◽  
Insurance Market ◽  
Market Development ◽  
Series Data ◽  
African Countries ◽  
Content Type ◽  
Bound Test

Purpose – The purpose of this paper is to examine the causal relationship between insurance penetration and economic growth in eight selected African countries. Design/methodology/approach – The auto-regressive distributed lags bounds approach to cointegration is employed on annual time-series data from 1990 to 2010 to test the causal relationship between insurance and economic growth in Algeria, Gabon, Kenya, Madagascar, Mauritius, Morocco, Nigeria and South Africa. The ratio of life and non-life insurance premiums to gross domestic product are employed as proxies for insurance market development. Findings – The results of the bound test shows a long-run relationship between insurance market activities and economic growth for Kenya, Mauritius, Morocco, Nigeria and South Africa. Causality analysis within the vector error correction model indicates a uni-directional causality from insurance market development to economic growth except for Morocco where there is evidence of a bi-directional causality. Causality within the vector autoregressive framework also provides evidence of a uni-directional causality for Algeria and Madagascar to support the “supply-leading” hypothesis while mixed causality was found for Gabon. Practical implications – This findings provides policy direction for governments and regulatory authorities for developing insurance market in the sample countries. Originality/value – This is the first study to examine the finance-growth relationship from the perspective of insurance markets in a cross-section of African countries.

Research publications and economic growth in South Africa: an empirical investigation

2016 ◽  
Vol 43 (7) ◽  
pp. 662-675
Author(s):  
Nicholas M Odhiambo ◽  
Lydia Ntenga
Keyword(s):  
Economic Growth ◽  
South Africa ◽  
Causal Relationship ◽  
Series Data ◽  
Bounds Testing ◽  
Content Type ◽  
Research Publications ◽  
Long Run ◽  
Ardl Bounds Testing ◽  
Short Run

Purpose – The purpose of this paper is to examine the causal relationship between research publications and economic growth – using time-series data from South Africa. The paper attempts to answer two critical questions: is there a long-run relationship between research publications and economic growth in South Africa? Do research publications from South African researchers Granger-cause economic growth? Design/methodology/approach – Unlike some of the previous studies, the current paper uses a trivariate ECM-based Granger-causality model to examine this linkage. Specifically, the study incorporates education as an intermittent variable between research and economic growth. In addition, the paper uses the recently developed autoregressive distributed lag (ARDL)-bounds testing procedure, which has numerous advantages, especially when the sample size is small. Findings – The results of this study show that there is a long-run relationship between research publications and economic growth in South Africa. The results also show that there is a distinct causal flow from research publications to economic growth in South Africa. This applies both in the short-run and in the long-run. Other results also show that: there is a short-run bidirectional causality between research publications and education; and there is a short-run bi-directional causality between education and economic growth, but a long-run unidirectional causal flow from education to economic growth. Practical implications – The findings of this paper underscore the crucial role that research plays in economic growth and development. Overall, the findings of this study show that research in South Africa is pro-growth. This implies that the recent significant increase in government expenditure on research and innovation, which is aimed at increasing the country’s scientific research outputs, is likely to pay off. Originality/value – To the best of the authors’ knowledge, this paper is the first of its kind to examine in detail the dynamic causal relationship between research outputs and economic growth in South Africa – using the recently developed ARDL-bounds testing approach within a trivariate setting.

Investigating the non-linear Wagner’s hypothesis in South Africa

2017 ◽  
Vol 8 (4) ◽  
pp. 462-473 ◽  
Author(s):  
Temitope Lydia A. Leshoro
Keyword(s):  
Economic Growth ◽  
South Africa ◽  
Government Spending ◽  
Time Series Data ◽  
Series Data ◽  
Unique Contribution ◽  
Content Type ◽  
Non Linear ◽  
Regression Error ◽  
The Government

Purpose The commonly adopted view of the relationship between government spending and economic growth follows the Keynesian approach, in which government spending is considered to determine economic growth. However, there is another theory, which suggests that economic growth in fact determines government spending. This is Wagner’s hypothesis. The purpose of this paper is to investigate which of the two approaches applies to South Africa, and further observes the level of non-linearity between the two variables. Design/methodology/approach This study was carried out using quarterly time series data from 1980Q1 to 2015Q1. Granger causality technique was used to observe the direction of causality between the two variables, while regression error specification test (RESET) was employed to determine whether the variables exhibit linear or non-linear behaviour. This was followed by observing the threshold band, using two techniques, namely, sample splitting threshold regression and quadratic generalised method of moments. Findings The causality result shows that South Africa follows Wagner’s law, whereby government spending is determined by economic growth, supporting Odhiambo (2015). The RESET result shows that the variables depict a non-linear relationship, thus the government spending economic growth model is non-linear. It was found that if positive economic development is to be achieved, economic growth should preferably be kept within the −1.69 and 3.0 per cent band, and specifically above 1 per cent band. Originality/value The unique contribution of this study is that no previous study has attempted the non-linear government spending-economic growth nexus whether within the Keynesian or Wagner law for South Africa.

scholarly journals Stock market development and economic growth in Tanzania: an ARDL and bound testing approach

2020 ◽  
Vol 5 (3) ◽  
pp. 187-206
Author(s):  
Saganga Mussa Kapaya
Keyword(s):  
Economic Growth ◽  
Stock Market ◽  
Time Series Data ◽  
Market Development ◽  
Series Data ◽  
Content Type ◽  
Stock Market Development ◽  
Testing Procedures ◽  
Long Run ◽  
Short Run

Purpose The purpose of this paper is to contribute to empirical evidence by recognizing the importance of stock markets in the financial system and consequently its causality to economic growth and vice versa. Design/methodology/approach The study used the autoregressive distribute lag model (ARDL) with bound testing procedures, the sample covered quarterly time-series data from 2001q1 to 2019q2 in Tanzania. Findings The results suggest that stock market development have both negative and positive causality for both short-run dynamics and long-run relationship with economic growth. Economic growth is found to only cause and relate negatively to liquidity both in the short-run and in the long-run. The results show predominantly a unidirectional causality flow from stock market development to economic growth and finds partial causality flow from economic growth to stock market development, as represented by stock market turnover which proxied liquidity. Originality/value The use of quarterly data to reflect more realistically the dynamics of the variables because yearly data may sometimes cover-up specific dynamics that may be useful for prediction and policy planning. The study uses indices to capture general aspects within the stock market against economic growth as an intuitive way to aggregate the stock market development effects.

scholarly journals Insurance market development: An empirical study of African countries

2015 ◽  
Vol 5 (4) ◽  
pp. 319-330
Author(s):  
Athenia Bongani Sibindi
Keyword(s):  
Economic Growth ◽  
South Africa ◽  
Life Insurance ◽  
Insurance Industry ◽  
Insurance Market ◽  
Market Development ◽  
Insurance Markets ◽  
African Countries ◽  
Life Insurance Industry ◽  
Insurance Density

The insurance industry plays a very crucial role in an economy by fostering intermediation and by its mechanism of risk bearing. As such it could be argued that the insurance industry fosters economic growth. In this article we analyse the global insurance market development trends, particularly focusing on Africa. Our sample comprise of the 10 African countries namely—South Africa, Angola, Nigeria, Kenya, Mauritius, Namibia, Algeria, Tunisia, Morocco and Egypt. We employ three insurance market development metrics namely; premium volumes, insurance density and insurance penetrations ratios to establish trends in the level of development of global insurance markets. Our results document that the African countries (excluding South Africa) have the least developed insurance markets. For most of the countries in our sample, the non-life insurance industry dominates the life-insurance industry. As such, it is imperative that their respective governments put in place measures that will grow their economies in order to stimulate the development of insurance markets in Africa.

Relating energy consumption to real sector value added and growth in a developing economy

2019 ◽  
Vol 13 (1) ◽  
pp. 166-182 ◽  
Author(s):  
Ebere Ume Kalu ◽  
Pius Bala Daniel ◽  
Uchenna Florence Nwafor ◽  
Chinwe R. Okoyeuzu ◽  
Okoro E.U. Okoro ◽  
...  
Keyword(s):  
Economic Growth ◽  
Energy Consumption ◽  
Time Series Data ◽  
Value Added ◽  
Industrial Sector ◽  
Series Data ◽  
Content Type ◽  
Development Indicators ◽  
Distributed Lag ◽  
Bound Test

Purpose The main aim of this study was to examine whether any relationship exists between energy consumption and value added of the agricultural and industrial sector as well as the overall growth rate of the Nigerian economy. Design/methodology/approach The study used annualized time series data from 1971 to 2014 drawn from the World Bank Development Indicators, adopting an autoregressive distributed lag technique in the data analyses as well as the bound test and error correction representation. Findings There is a very strong evidence of the existence of a long-run relationship between energy consumption and indicators of economic growth. There are very strong proofs that economic growth and agricultural value added adjust to the shocks and dynamics of the studied energy-consumption-related variables while manufacturing value added proved otherwise. Originality value No study to the best of our knowledge has brought together aggregate growth, agricultural value added and manufacturing value added in the investigation of the energy consumption and economic growth nexus in one study using the Nigerian stylized economic environment. This represents the value added of this study and shows its originality.

scholarly journals Pre-COVID-19 evaluation of external debt, corruption and economic growth in South Africa

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Ebenezer Gbenga Olamide ◽  
Andrew Maredza
Keyword(s):  
Economic Growth ◽  
South Africa ◽  
Time Series ◽  
Time Series Data ◽  
External Debt ◽  
Public Institutions ◽  
Series Data ◽  
Content Type ◽  
Long Run ◽  
Short Run

PurposeThis study is a pre-COVID-19 exposition of the existing situation about external debt-GDP relationship, incorporating corruption into the hypothesis, making South Africa the object of the study. The aim is to examine the causal relationship between corruption, economic growth and external debt, and in the end proffer solutions to the problems arising therefrom.Design/methodology/approachThe study employed ARDL technique on time series data running from 1990 to 2019 with real gross domestic product as the dependent variable and external debt, external debt servicing, corruption, inflation and capital formation as regressors. Necessary tests that include unit root, cointegration, CUSUM and CUSUMSq, normality, serial correlation and heteroscedasticity were performed on the model.FindingsThe study shows that corruption, inflation and external debt servicing exert negative influences on economic growth while the effect of investment on growth was positive. External debt's effect in the short run was positive while its long-run effect on growth was negative. Among other things, the need to improve and strengthen public institutions in addition to targeting tax evaders and avoiders for increased government revenue were emphasized.Originality/valueThe study incorporates corruption into the country specific debt-GDP debate as against earlier studies that excluded corruption in their time series analysis or that were cross-country based. The authors also exposit the existing knowledge of the debt-GDP hypothesis before the outbreak of COVID 19 pandemic. This is expected to serve as a precursor to subsequent studies on the rising debt of South Africa during and after the pandemic.

scholarly journals Non-bank financial institutions and economic growth: Evidence from Africa’s three largest economies

2017 ◽  
Vol 20 (1) ◽  
Author(s):  
Ronald Rateiwa ◽  
Meshach J. Aziakpono
Keyword(s):  
Economic Growth ◽  
South Africa ◽  
Financial Institutions ◽  
Time Series Data ◽  
Bank Lending ◽  
Series Data ◽  
The Sustainable Development ◽  
Long Run ◽  
The Relationship

Background: In order for the post-2015 world development agenda – termed the sustainable development goals (SDGs) – to succeed, there is a pronounced need to ensure that available resources are used more effectively and additional financing is accessed from the private sector. Given that traditional bank lending has slowed down, the development of non-bank financing has become imperative. To this end, this article intends to empirically test the role of non-bank financial institutions (NBFIs) in stimulating economic growth.Aim: The aim of this article is to empirically test the existence of a long-run equilibrium relationship between economic growth and the development of NBFIs, and the causality thereof.Setting: The empirical assessment uses time-series data from Africa’s three largest economies, namely, Egypt, Nigeria and South Africa, over the period 1971–2013.Methods: This article uses the Johansen cointegration and vector error correction model within a country-specific setting.Results: The results showed that the long-run relationship between NBFI development and economic growth is relatively stronger in Egypt and South Africa, than in Nigeria. Evidence in respect of Nigeria shows that such a relationship is weak. The nature of the relationship between NBFI development and economic growth in Egypt is positive and significant, and predominantly bidirectional. This suggests that a virtuous relationship between NBFIs and economic growth exists in Egypt. In South Africa, the relationship is positive and significant and predominantly runs from NBFI development to economic growth, implying a supply-leading phenomenon. In Nigeria, the results are weak and mixed.Conclusion: The study concludes that in countries with more developed financial systems, the role of NBFIs and their importance to the economic growth process are more pronounced. Thus, there is need for developing policies targeted at developing the NBFI sector, given their potential to contribute to economic growth.

Impact of Health and Agriculture Financing on Economic Growth in Nigeria

2021 ◽  
Vol 7 (18) ◽  
pp. 37-58
Author(s):  
Rasaki Olufemi KAREEM ◽  
◽  
Olawale LATEEF ◽  
Muideen Adejare ISIAKA ◽  
Kamilu RAHEEM ◽  
...  
Keyword(s):  
Economic Growth ◽  
Federal Government ◽  
Causal Relationship ◽  
Agricultural Sector ◽  
Time Series Data ◽  
Capital Expenditure ◽  
Government Expenditure ◽  
Health Sector ◽  
Series Data ◽  
The Impact

The study focused on the impact of health and agriculture financing on economic growth in Nigeria from 1981 to 2019. The study utilized the time series data which was extracted from Central Bank of Nigeria annual statistical bulletin. Unit Root test was performed with the use of Augmented Dickey-Fuller test in order to ascertain the stationarity of all the variables and they were all found to be stationary at order 1 in the two specified models (composite and disaggregated). Error Correction Model (ECM) was used to analyze the data in order to determine the speed of adjustment from the short run to the long run equilibrium state. Casualty test was used to confirm causal relationship among the variables of interests. The study revealed that Federal Government expenditure in Health sector has a significant effect on economic growth in Nigeria. Federal Government expenditure in Agricultural sector equally had a positive effect on economic growth but surprisingly not significant. Considering the disaggregated form, Federal Government capital expenditure in both Health and Agricultural sectors have positive and statistically significant effect on economic growth while Federal Government recurrent expenditure on health has a positive and statistically insignificant effect in economic. It was also revealed that there is causal relationship among the variables. Based on the findings, the study concluded that Federal Government Expenditure in Health Sectors and Agriculture Sectors have effect on economic growth in Nigeria.

CAUSAL RELATIONSHIP OF ENERGY CONSUMPTION AND ECONOMIC GROWTH – A CASE STUDY OF PAKISTAN

2021 ◽  
Vol 9 (1) ◽  
pp. 139-164
Author(s):  
Saddam Hussain ◽  
Chunjiao Yu
Keyword(s):  
Economic Growth ◽  
Time Series ◽  
Energy Consumption ◽  
Causal Relationship ◽  
Inflation Rate ◽  
Time Series Data ◽  
Consumer Price Index ◽  
Series Data ◽  
Relationship Of

This paper explores the causal relationship between energy consumption and economic growth in Pakistan, applying techniques of co-integration and Hsiao’s version of Granger causality, using time series data over the period 1965-2019. Time series data of macroeconomic determi-nants – i.e. energy growth, Foreign Direct Investment (FDI) growth and population growth shows a positive correlation with economic growth while there is no correlation founded be-tween economic growth and inflation rate or Consumer Price Index (CPI). The general conclu-sion of empirical results is that economic growth causes energy consumption.

Has the low level of economic growth spurred informal sector activities in Uganda? An empirical analysis

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Stephen Esaku
Keyword(s):  
Economic Growth ◽  
Informal Sector ◽  
Shadow Economy ◽  
Time Series Data ◽  
Series Data ◽  
Content Type ◽  
Low Level ◽  
Revenue Collection ◽  
Long Run ◽  
Short Run

PurposeIn this paper, the authors examine how economic growth shapes the shadow economy in the long and short run.Design/methodology/approachUsing annual time series data from Uganda, drawn from various data sources, covering the period from 1991 to 2017, the authors apply the ARDL modeling approach to cointegration.FindingsThis paper finds that an increase in economic growth significantly reduces the size of the shadow economy, in both the long and short run, all else equal. However, the long-run relationship between the shadow economy and growth is non-linear. The results suggest that the rise of the shadow economy could partially be attributed to the slow and sluggish rate of economic growth.Practical implicationsThese findings imply that addressing informality requires addressing underlying factors of underdevelopment since improvements in economic growth also translate into a reduction in the size of the shadow economy in the short and long run.Originality/valueThese findings reveal that the low level of economic growth is an issue because it spurs informal sector activities in the short run. However, as the economy improves, it becomes an incentive for individuals to operate in the informal sector. Additionally, tackling shadow activities in the short run could help improve tax revenue collection.

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