Insurance and economic growth in Ghana

Abstract

The study was necessitated by the fact that insurance has been recognized by many researchers as having effect on economic growth but little has been done in that regard in Ghana. The main objective of the study is to examine the effect of insurance on economic growth in Ghana using quarterly data from the first quarter of 2006 to the second quarter of 2018. The study employed Johansen and Juselius cointegration approach and Vector Error Correction Model (VECM). Findings revealed that there is a significant and positive both short and long run relationship between insurance and economic growth in Ghana. There is also a bidirectional causality between insurance and economic growth. The study recommends that in order to promote economic growth, attention must be given to the development and implementations of policies that promote an increase in coverage and access of insurance products in order to increase premium. The regulatory body, National Insurance Commission (NIC) should reinforce existing policies such as compulsory motor insurance, compulsory fire insurance for private/ public buildings, etc. in order to increase premium income.