Ethiopian Insurance sector and its Contribution to Economic Growth
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Date
2018-01
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Addis Ababa University
Abstract
The study examines the contribution of Ethiopian Insurance industry to the economic
growth. It analyses both the long run and short run dynamics among important
determinants of variables over the period 37 years (1980-2016). Using unit root tests and
Johansen Co integration tests are applied to investigate relationship among the variables
respecting. Error correction model has been used to analysis the long run and short run
movements of variables. A pair wise granger causality test has also used to examine the
causal relationship among the variables in the model.
The study observed that there is long run relationship between insurance development
and economic growth in Ethiopia. The regression result indicated that insurance
premium and insurance claim has significant and negative relationship with economic
growth in the long run and short run dynamics. However insurance profit has positive
significant and insurance investment has positive but insignificant relation with economic
growth. The result of granger causality test indicates that there is unidirectional
relationship from economic growth to insurance premium, insurance claim and
insurance profit. It also shows bidirectional relationship between economic growth and
insurance profit. However insurance investment has no causal relation with any variable
in short run. The implication of this finding is that there is a causal relationship between
insurance performance and economic growth. The study concludes that the economic
growth has positive impacts on the growth of insurance development.
Description
A Research Project Submitted to The Addis Ababa University College of Business and
Economics in Partial Fulfillment of the Requirements for The Degree of Masters of
Business and Administration Specialize in Financial Services
Keywords
Economic Growth, Insurance Premium, Claim Payment