Can insurance ensure economic growth in an emerging economy? Fresh evidence from a non-linear ARDL approach.

Purpose: This study aims to explore the nexus between insurance penetration and economic development in Vietnam, one of the fastest-growing economies over the past two decades. Design/methodology/approach: This study uses an updated data set of the insurance sector in Vietnam from 1996 to 2020. The autoregressive lagging distribution and cointegrating non-linear autoregressive lagging distribution (NARDL) models are used to explore the nexus between the insurance market development and economic growth. Findings: This study confirms the unidirectional causality and positive impacts of insurance market development on economic growth both in the short and long term, supporting the "supply-leading" hypothesis. Nonlife insurance has more significant but slower impacts on contributing to economic development in the long run. From the NARDL approach, this study also discloses the asymmetric relationship between the insurance industry and economic growth. Aggregate and life insurance display short- and long-term asymmetric impacts, whereas nonlife insurance shows long-term asymmetry. Originality/value: To the best of the authors' knowledge, this is the first study to examine the hidden asymmetries of the insurance-growth nexus in Vietnam from non-linear models. Notwithstanding the theoretical contributions to the prior literature, several practical implications are proposed for insurance businesses, policymakers and investors. [ABSTRACT FROM AUTHOR]