Empirical Research Of The Effect Of Insurance Development On The Regional Economic Growth

With the development of national economy, the insurance industry plays a more and more important role in macro-economics, undertaking its great responsibility of booster and stabilizer. Meanwhile, regional economics is widely paid much attention and praised for its unique perspective and outstanding contribution to resolving regional economic problems. However, there has been a serious imbalance in China's regional economic development, and the development of insurance has been still lagging behind relatively to many developed countries, so the study from a regional economic perspective on the impact of insurance on the macroeconomic reveals its theoretical and practical significance. This thesis attempts to reveal the internal relationship between insurance and macro-economic growth from the viewpoint of insurance economics. According to the analytical methods of micro-finance, property insurance can be regarded as a kind of particular hedging and life insurance can be regarded as a kind of critical resource allocation tool. Afterwards, under the neoclassical economic growth framework, the theoretical model of regional economic growth including insurance factor is derived from revised Solow growth model, and then set the cross-sectional data model and panel data model respectively. Using the data from 1997 to 2007 of provincial data of our country to test the econometric model and make the empirical analysis, and adding the interaction term of insurance and other financial intermediation and the dummy variables which represent the regional difference into the empirical model, the empirical results show that life insurance penetration has a relatively positive effect on the regional economic growth, but the impact of property insurance is not significant as well. However, the higher levels of banking and property insurance penetration jointly produce a greater effect on economic growth. The empirical results also suggest that there is a significant difference of the effect of insurance on the economic growth between three regions in our country. The insurance develops more rapidly in the eastern region, the impact of insurance on the economic growth in the region is also larger, followed by the central part and the western region. Finally, according to China's specific national conditions, some constructive policy recommendations are given.