Globalization and insurance activity: Evidence on the industrial and emerging countries

• The cointegrating linkage between insurance and globalizations is explored.
• A bidirectional causality between insurance penetrations and globalizations.
• Globalization has a larger impact on insurance in the industrial countries.

This study applies panel cointegration with cross-country dependence and causality tests to uncover the extent and the magnitude of the relationship between insurance penetration and globalization. The results first confirm evidence of the long-run relationship between insurance market activities and globalization. Second, we find positive impacts of all three globalization indices on life and non-life insurance penetrations, and globalization has a larger impact on insurance market activities in the industrial countries than in the emerging countries. Finally, the results of panel causality tests roughly show bidirectional causality between insurance market activities and globalization in the long run.