Can insurance ensure economic growth in an emerging economy? Fresh evidence from a non-linear ARDL approach

This study explores the nexus between insurance penetration and economic development in Vietnam during the period 1996-2020. By utilising the Autoregressive Lagging Distribution Model - ARDL, we find uni-directional causality and positive impacts of insurance market development on economic growth both in short and long term, supporting the “supply-leading” hypothesis. Non-life insurance has more significant but slower impacts on contributing to economic development in the long run. This study further confirms the asymmetric relationship between the insurance industry and economic growth by employing the cointegrating nonlinear ARDL (NARDL). The aggregate and life insurance exhibit both short-run and long-run asymmetric impacts on economic development, while non-life insurance only shows asymmetric impacts in the long run. From the starting points of this study, several implications are proposed for businesses, policymakers, investors, and the insurance market development in Vietnam