Insurance and economic growth in sub-Saharan Africa: Institutional quality threshold effect

Abstract

This paper examines the influence of institutional quality institutional quality on the relationship between the extent of both non-life insurance and life insurance and economic growth in sub-Saharan Africa. The paper employs a dynamic threshold model for the analysis of a panel of data consisting of 34 countries over the period 1990 to 2017. The findings of the research reveal that non-life insurance exerts an significant effect on economic growth when the level of institutional quality institutional quality is high, while the association becomes insignificant when the level of institutional quality institutional quality is low. In contrast, the effect of life insurance on economic growth is insignificant at both at high and low levels of institutional quality. The paper also considered the effect of the different types of insurance in both low- and middle-income countries in the sub-Saharan region. Overall, the paper emphasises the important role of non-life insurance in enhancing economic growth, and the dependence of this effect on the level of institutional quality in a country.