Does Insurance Development Affect the Financial Markets in developing countries?

Relwende Sawadogo (1) , Samuel Guérineau (1)

1 CERDI - Centre d'Études et de Recherches sur le Développement International

This paper investigates the impact of insurance premiums on stock market development in 37 developing countries over the period 1987-2011. By controlling for the potential endogeneity bias, using the System GMM estimator, we show that the insurance premiums significantly increase the stock market total value traded. This result is robust to the use of alternative measure of stock market development and control of the political and legal system quality. In addition, the results highlight that an improvement in property rights promotes the deepening of the financial market. Thus, the results argue for insurance policies promoting and an improvement of the legal environment to benefit from the financial market development.

Mots clés: Stock market; Insurance Premiums; developing countries

Domaines: Economies et finances

Relwende Sawadogo, Samuel Guérineau. Does Insurance Development Affect the Financial Markets in developing countries?. 2015. ⟨halshs-01178840⟩