Insurance market density and economic growth in Eurozone countries: the granger causality approach

Abstract Background This study examines the relationship between insurance market density (IMD) and economic growth. Methods We employed Granger causality technique in 19 Eurozone countries for the period 1980-2014. We use three different indicators of IMD, namely life insurance density, non-life insurance density, and total insurance density. We particularly emphasize on whether Granger causality runs between IMD and economic growth both ways, one way, or not at all. Results Our empirical result recognizes the presence of both unidirectional and bidirectional causality between insurance market density and economic growth. However, these results are mostly non-uniform across Eurozone countries. Conclusions This study holds important policy implications- economic policies should recognize the differences in the insurance market density and economic growth in order to maintain sustainable economic growth in the Eurozone