The Economic Significance of Insurance Markets in Developing Countries

The importance of the relationship between financial development and economic growth is recognized in the economic literature. Recent evidence suggests that the developing countries have a supply-leading causality pattern of development. Property-Liability insurance like other financial services has grown in quantitative importance as part of the general development of financial institutions. This article investigates empirically the relationship between property-liability insurance premiums and economic and financial development. A model is specified for property-liability insurance demand and it is tested with a cross-section of 55 developing countries.

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