It is widely understood that the insurance and banking sectors of every economy perform some functions in driving economic growth. What is not yet well documented is whether their roles are complimentary or substitutive. With the aid of the dynamic panel generalized method of moments (GMM) estimation technique, this paper evaluates the synergistic effect of both sectors on economic growth in a panel of 10 African countries that are responsible for most of the activities in the continent's financial sector. The insurance-banking-growth nexus was also examined through bootstrap panel causality tests. The results show that the life insurance market and the banking sector, as well as the non-life insurance market and the banking sector, are complimentary. We find that, overall, the relationship between the insurance and banking sectors in Africa is a complimentary one and that their synergistic impact on economic growth is positive. The feedback hypothesis was also confirmed in the relationship between the insurance sector and economic growth and between the banking sector and economic growth.
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Penn State Univ, Sch Business Adm, University Pk, PA 16802 USA
World Bank Grp, Washington, DC 20433 USAPenn State Univ, Sch Business Adm, University Pk, PA 16802 USA
Bayraktar, Nihal
Wang, Yan
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World Bank Grp, Washington, DC 20433 USAPenn State Univ, Sch Business Adm, University Pk, PA 16802 USA
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Univ Texas San Antonio, San Antonio, TX USA
Univ Texas San Antonio, Dept Econ, One UTSA Circle, San Antonio, TX 78249 USAUniv Texas San Antonio, San Antonio, TX USA
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ISEG - Lisbon School of Economics and Management of the Universidade de Lisboa, Lisbon
UECE – Research Unit on Complexity and Economics, Rua Miguel Lupi, 20, LisbonISEG - Lisbon School of Economics and Management of the Universidade de Lisboa, Lisbon
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Kobe Univ, Grad Sch Business Adm, Nada Ku, 2-1 Rokkodai Cho, Kobe, Hyogo 6578501, JapanKobe Univ, Grad Sch Business Adm, Nada Ku, 2-1 Rokkodai Cho, Kobe, Hyogo 6578501, Japan
Tongurai, Jittima
Vithessonthi, Chaiporn
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Sunway Univ, Business Sch, 5 Jalan Univ, Bandar Sunway 47500, Selangor Darul, MalaysiaKobe Univ, Grad Sch Business Adm, Nada Ku, 2-1 Rokkodai Cho, Kobe, Hyogo 6578501, Japan
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Univ Calicut, Dr John Matthai Ctr, Dept Econ, Trichur 680618, Kerala, IndiaUniv Calicut, Dr John Matthai Ctr, Dept Econ, Trichur 680618, Kerala, India
Shima, K. M.
Vimala, M.
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Vimala Coll, Dept Econ, Trichur 680009, Kerala, IndiaUniv Calicut, Dr John Matthai Ctr, Dept Econ, Trichur 680618, Kerala, India