Abstract : This paper investigates the impact of insurance on stock market development in 37
developing countries over the period 1987-2011. By controlling for the potential endogeneity
bias by System GMM estimator, we show that the insurance premiums significantly increase
the stock market 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.