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Determinants of life insurance consumption in Africa

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  • Alhassan, Abdul Latif
  • Biekpe, Nicholas
Abstract
We take motivation from the low insurance penetration in Africa to investigate the factors that influence life insurance consumption in 31 African countries from 1996 to 2010. By employing both ordinary least squares and instrumental variables regressions, this study finds that demographic factors better explain life insurance consumption compared to financial factors. While we find income, inflation, dependency ratio and life expectancy lead to decline in life insurance consumption, financial development, health expenditure and institutional quality are found to positively impact on life insurance consumption in Africa. The findings provide policy implications for the development of life insurance markets in Africa.

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  • Alhassan, Abdul Latif & Biekpe, Nicholas, 2016. "Determinants of life insurance consumption in Africa," Research in International Business and Finance, Elsevier, vol. 37(C), pages 17-27.
    • Handle: RePEc:eee:riibaf:v:37:y:2016:i:c:p:17-27
    DOI: 10.1016/j.ribaf.2015.10.016
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    Cited by:

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    5. Mwambuli Erick & Tumwindike Ephraim, 2022. "What Drives the Development of Life Insurance Sector? Empirical Evidence from Tanzania," World Journal of Business and Management, Macrothink Institute, vol. 8(2), pages 35-49, December.
    6. Odunayo Olarewaju & Thabiso Msomi, 2021. "Determinants of Insurance Penetration in West African Countries: A Panel Auto Regressive Distributed Lag Approach," JRFM, MDPI, vol. 14(8), pages 1-15, July.
    7. Simona Laura Dragoş & Codruţa Mare & Cristian Mihai Dragoş, 2019. "Institutional drivers of life insurance consumption: a dynamic panel approach for European countries," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 44(1), pages 36-66, January.
    8. Asongu, Simplice A. & Nwachukwu, Jacinta C., 2017. "The synergy of financial sector development and information sharing in financial access: Propositions and empirical evidence," Research in International Business and Finance, Elsevier, vol. 40(C), pages 242-258.
    9. Simplice A. Asongu & Nicholas M. Odhiambo, 2020. "Insurance and Inequality in Sub-Saharan Africa: Policy Thresholds," Research Africa Network Working Papers 20/005, Research Africa Network (RAN).
    10. Sisira Kumara NARADDA GAMAGE, & Li LIN, & Ihtisham ul HAQ, 2016. "Economic & Demographic Characterictics, Social Capital And Demand For Life Insurance: Evidence From Central Region Of Sri Lanka," EcoForum, "Stefan cel Mare" University of Suceava, Romania, Faculty of Economics and Public Administration - Economy, Business Administration and Tourism Department., vol. 5(2), pages 1-9, July.
    11. Gaganis, Chrysovalantis & Hasan, Iftekhar & Pasiouras, Fotios, 2020. "Cross-country evidence on the relationship between regulations and the development of the life insurance sector," Economic Modelling, Elsevier, vol. 89(C), pages 256-272.
    12. Harcourt-Cooke, Claire & Els, Gideon & van Rensburg, Eugene, 2022. "Using comics to improve financial behaviour," Journal of Behavioral and Experimental Finance, Elsevier, vol. 33(C).
    13. Nguyen Phuc Canh & Udomsak Wongchoti & Su Dinh Thanh, 2021. "Does economic policy uncertainty matter for insurance development? Evidence from 16 OECD countries," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 46(4), pages 614-648, October.
    14. Simplice A. Asongu & Nicholas M. Odhiambo, 2019. "Enhancing ICT for insurance in Africa," Review of Development Finance Journal, Chartered Institute of Development Finance, vol. 9(2), pages 16-27.
    15. Jacob Azaare & Zhao Wu & Bright Nana Kwame Ahia, 2022. "Exploring the Effects of Classical Auto Insurance Rating Variables on Premium in ARDL: Is the high Policyholders’ Premium in Ghana Justified?," SAGE Open, , vol. 12(4), pages 21582440221, October.
    16. J. François Outreville, 2021. "Insurance and foreign direct investment: a review (or lack) of evidence," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 46(2), pages 236-247, April.
    17. Milijana Novovic Buric & Ljiljana Kascelan & Vladimir Kascelan, 2023. "Economic and demographic determinants of premium reserve in Western Balkan countries during and after the crisis," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 28(1), pages 1116-1136, January.
    18. Yllka Ahmeti & Etem Iseni, 2022. "Factors Affecting Profitability of Insurance Companies. Evidence from Kosovo," Academicus International Scientific Journal, Entrepreneurship Training Center Albania, issue 25, pages 122-142, January.
    19. Cong Tam Trinh & Minh-Tri Ha & Nhut Quang Ho & Tho Alang, 2023. "National culture, public health spending and life insurance consumption: an international comparison," Palgrave Communications, Palgrave Macmillan, vol. 10(1), pages 1-14, December.
    20. Martin Hodula & Jan Janků & Martin Časta & Adam Kučera, 2023. "On the macrofinancial determinants of life and non-life insurance premiums," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 48(4), pages 760-798, October.
    21. Olasehinde-Williams, Godwin & Balcilar, Mehmet, 2020. "Examining the Effect of Globalization on Insurance Activities in Large Emerging Market Economies," Research in International Business and Finance, Elsevier, vol. 53(C).
    22. Balcilar, Mehmet & Gupta, Rangan & Lee, Chien-Chiang & Olasehinde-Williams, Godwin, 2020. "Insurance and economic policy uncertainty," Research in International Business and Finance, Elsevier, vol. 54(C).

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    More about this item

    Keywords

    Life insurance penetration; Demography; Financial; Determinants; Africa;
    All these keywords.

    JEL classification:

    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
    • G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies; Actuarial Studies
    • J10 - Labor and Demographic Economics - - Demographic Economics - - - General
    • N97 - Economic History - - Regional and Urban History - - - Africa; Oceania

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