The relationship between globalization and insurance activities: A panel data analysis

- Causality exists between globalization and insurance activity.
- The nexus of globalization and insurance activity varies across countries.
- Globalization can stimulate the insurance market.
- Non-life insurance sector can do better in promoting globalization.
- Bootstrap Panel Granger causality test is properly used given certain constraints.

This study applies a Bootstrap Panel Granger causality test to investigate whether there is causal relationship between globalization and insurance activity. We examine data from sigma reports of Swiss Reinsurance Company for 8 Eastern Asian countries over the period of 1979-2008. Empirically, results for one-way Granger causality show the influence of total insurance activity, life insurance activity, and non-life insurance activity on globalization only in Korea. However, there is strong causality from globalization to insurance activity for Thailand, Malaysia, and the Philippines. In our research, the results show that the causality between globalization and insurance activity varies across countries with different conditions. The findings of this study could provide important policy implications for the 8 Eastern Asian countries under study, namely India, Indonesia, Japan, Malaysia, the Philippines, Singapore, South Korea, and Thailand.