Insurance and economic policy uncertainty

dc.contributor.authorBalcilar, Mehmet
dc.contributor.authorGupta, Rangan
dc.contributor.authorLee, Chien-Chiang
dc.contributor.authorOlasehinde-Williams, Godwin
dc.contributor.emailrangan.gupta@up.ac.zaen_ZA
dc.date.accessioned2021-08-31T11:34:09Z
dc.date.issued2020-12
dc.description.abstractJust as the world has witnessed the increased importance of the insurance sector over the past few decades, it has also witnessed a sharp rise in risks and uncertainties. Surprisingly, studies analyzing the relationship between economic policy uncertainty and the insurance sector are almost non-existent. Another major limitation of insurance literature is the choice of methodology. Most studies on the insurance sector do not take into consideration issues of heterogeneity and cross-sectional dependence, and are therefore subject to errors. To address the identified gaps, this research investigates the impact of economic policy uncertainty on insurance premiums in a panel of 15 countries over the period 1998–2016 by employing heterogeneous panel estimation techniques with cross-sectional dependence. The Durbin-Hausman cointegration tests of Westerlund (2008) confirm that a long-run relationship exists between the variables. Findings from the error correction based panel estimations show that the insurance sector is not immune to the effects of economic policy uncertainty. Economic policy uncertainty raises insurance premiums both in the short and long run, although the long-run impact is greater than the short-run impact. In addition, economic policy uncertainty exerts a bigger influence on non-life insurance premium than on life insurance premium, indicating that the economic risks covered by non-life insurance are more sensitive to uncertainty than the mortality and longevity risks covered by life insurance. Our findings further show that national income, education, population, financial development and institutional quality all raise insurance premiums, while inflation lowers insurance premiums.en_ZA
dc.description.departmentEconomicsen_ZA
dc.description.embargo2023-05-30
dc.description.librarianhj2021en_ZA
dc.description.urihttp://www.elsevier.com/locate/ribafen_ZA
dc.identifier.citationBalcilar, M., Gupta, R., Lee, C.-C. et al. 2020, 'Insurance and economic policy uncertainty', Research in International Business and Finance, vol. 54, art. 101253, pp. 1-13.en_ZA
dc.identifier.issn0275-5319
dc.identifier.other10.1016/j.ribaf.2020.101253
dc.identifier.urihttp://hdl.handle.net/2263/81558
dc.language.isoenen_ZA
dc.publisherElsevieren_ZA
dc.rights© 2020 Elsevier B.V. All rights reserved. Notice : this is the author’s version of a work that was accepted for publication in Research in International Business and Finance. Changes resulting from the publishing process, such as peer review, editing, corrections, structural formatting, and other quality control mechanisms may not be reflected in this document. A definitive version was subsequently published in Research in International Business and Finance, vol. 54, art. 101253, pp. 1-13, 2020. doi : 10.1016/j.ribaf.2020.101253.en_ZA
dc.subjectEconomic policy uncertainty (EPU)en_ZA
dc.subjectInsurance premiumen_ZA
dc.subjectShort- and long-run relationshipsen_ZA
dc.subjectPanel dataen_ZA
dc.titleInsurance and economic policy uncertaintyen_ZA
dc.typePostprint Articleen_ZA

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