Does insurance hedge macro volatility? Global evidence
Journal: Investment Management and Financial Innovations (Vol.14, No. 2)Publication Date: 2017-08-22
Authors : Paul Moon Sub Choi; Won Young Chae; Joung Hwa Choi; Young Bin Han;
Page : 307-315
Keywords : economic stability; insurance; macroeconomic volatility; market completeness;
Abstract
Insurance is known in the literature as a contribution to economic growth. In our cross-country analysis, we found out that insurance density also appears to subdue macro volatility. In other words, an overall expansion of insurance coverage in an economy cushions aggregate risks. This empirical inference remains robust to controlling for other covariates known to co-move with economic activities. Given that the contribution of insurance to economic growth is more impactful in developing countries than in industrialized economies, not only this result is appealing to economic intuition, but also extends the claims in the existing researches.
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Last modified: 2018-03-14 21:47:58