ABSTRACT
We study the role of institutional quality and insurance markets in the economic growth of middle-income countries between 2005 and 2019. Insurance market development consistently explains long- and short-run growth. Institutional quality is a better predictor of long-run growth, but is more erratic regarding sign and significance for short-run growth.
Disclosure statement
No potential conflict of interest was reported by the author(s).
Notes
1 As rendered by the World Bank’s Country Policy and Institutional Assessment. We conducted principal component analysis (PCA) to procure a composite index of institutional quality (CIQ) (details available from authors).
2 Non-life insurance density (NID), life insurance density (LID), total insurance density (TID), non-life insurance penetration (NIP), life insurance penetration (LIP), and total insurance penetration (TIP).
3 Percentage change of gross domestic product per capita.
4 This selection of variables follows Pradhan et al. (Citation2017).
5 The results of these three tests (cross-sectional dependency, unit root and co-integration) are not reported to conserve space.
6 We fix lag length 1 for all variables on the basis of Akaike Information Criterion (AIC).