Universal Journal of Accounting and Finance Vol. 9(6), pp. 1280 - 1296
DOI: 10.13189/ujaf.2021.090608
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Impact of Economic Factors on Life and Non- Life Insurance Development in Albania – A VECM Analysis


Gentiana Sharku 1, Perseta Grabova 1,*, Donald Vullnetari 2
1 Department of Finance, Faculty of Economics, University of Tirana, Tirana, 1001, Albania
2 Department of Economics, Faculty of Economics, University of Tirana, Tirana, 1001, Albania

ABSTRACT

This paper intends to explore the economic factors which stimulate the demand for insurance products in Albania due to the fact that insurance industry has a significant effect on the economic development of a country. Albania is a developing country and insurance market has progressed moderately. Considering density insurance as a proxy of life and non-life insurance market development, the authors have examined the economic determinants of the Albanian insurance market during the period of 2009-2020 based on quarterly data. The analysis is performed using Vector Error Correction Model designing separate models for each of the insurance segments: life and non-life ones. Among several economic variables, this paper examines the effect of GDP, inflation, real interest rate and unemployment. According to the empirical results, GDP per capita has the most significant impact while unemployment is found to be insignificant in respect to life and non-life insurance density. The results are mostly in accordance with the empirical research work, and they are valuable to both academics and experts in insurance industry. The paper contributes to the existing international literature, especially to the literature related to developing countries, being the first one investigating the influence of a set of economic factors on life and non-life insurance industry in Albania. On the other hand, the results of the paper suggest that insurance companies monitor should evaluate these factors in order to increase and improve insurance service available to the public.

KEYWORDS
Life Insurance, Non-Life Insurance, Insurance Density, Economic Factors, Albania, VECM

Cite This Paper in IEEE or APA Citation Styles
(a). IEEE Format:
[1] Gentiana Sharku , Perseta Grabova , Donald Vullnetari , "Impact of Economic Factors on Life and Non- Life Insurance Development in Albania – A VECM Analysis," Universal Journal of Accounting and Finance, Vol. 9, No. 6, pp. 1280 - 1296, 2021. DOI: 10.13189/ujaf.2021.090608.

(b). APA Format:
Gentiana Sharku , Perseta Grabova , Donald Vullnetari (2021). Impact of Economic Factors on Life and Non- Life Insurance Development in Albania – A VECM Analysis. Universal Journal of Accounting and Finance, 9(6), 1280 - 1296. DOI: 10.13189/ujaf.2021.090608.