Insurance Development and Consumption-An Analysis Based on Chinese Provincial Panel Data

The influence of financial development on economic growth is a hot topic in the study of economics, and as insurance is an important part of the financial system, its role in economic development also attracts more and more atteniton. Firstly, based on the Solow model with insurance development, this paper constructs a basic model of the relationship between insurance development and consumption combined with Diamond's OLG model. Secondly, using the provincial level panel data during 1999-2010 in China, the paper does some empirical analyses. The research shows that, in the long run, as a whole there is significant positive relationship between insurance development and consumption growth,. Ihelife insurance has an significant effect on consumption growth, while non-life insurance has no significant effect on consumption growth. The life insurance industry has a bigger effect on consumption growth than non-life insurance industry.