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Abstract
Insurance and credit markets share some common roles in stimulating economic growth, whether they are complementary or not is worth researching further. Based on the generalized method of moments, this paper investigates the synergistic effects between insurance and credit markets on economic growth in Chinese different regions using an interaction term in the regression model. Moreover, to understand the different economic roles of life and nonlife insurance sectors, we include them into estimation model as well. The results indicate that total insurance and credit markets are substituted, life insurance and credit markets are substituted, and nonlife insurance and credit markets are complementary in the whole region. Specifically, the synergistic effects between insurance and credit markets on economic growth vary considerably across different regions. These findings offer several useful insights for policy-makers.
ORCID
Chien-Chiang Lee http://orcid.org/0000-0003-0037-4347
Notes
1. These ways include: (1) promoting financial stability; (2) facilitating trade and commerce; (3) mobilizing domestic savings; (4) allowing different risks to be managed more efficiently by encouraging the accumulation of new capital; (5) fostering a more efficient allocation of domestic capital; and (6) helping to reduce or mitigate losses (Skipper, Citation1997).
2. The p-values for Sargan tests are close to one which indicates that the instruments in correct specification, while the p-values for Hansen tests are close to one which indicates that the instruments in the regressions are efficienct.