INSURANCE MARKET DEVELOPMENT AND ECONOMIC GROWTH: EVIDENCE FROM WESTERN BALKANS REGION

The basic objective of the paper is the examination of mutual interdependence of the parameters on insurance market and the economic growth at the specific area of ex-Yugoslavia. Time horizon of the observation encompasses the period 2005-2019, and as the appropriate methodological framework, the econometrics of panel data was used. The accompanying co-integration tests and tests of long-term effects have shown that the insurance sector and economic growth are long-term related, as well as that the insurance sector exerts positive and statistically significant influence on the economic growth. Additionally, it was shown that non-life insurance realizes more significant effects on growth. To confirm robustness, causality test has shown that changes in insurance sector cause the changes in economic growth. Economic policy makers have an important task ahead of them, which consists in promoting insurance markets, improvement of regulation, and legislation framework that should contribute to the growth of economic activity in analyzed countries.