The Impact of the Insurance Industry on Investment in the Iranian Economy

Safarzadeh, E.; Salarieh, S.

doi:10.22056/ijir.2023.01.04

Document Type : Original Research Paper

Authors

Department of Economics, Faculty of Social Sciences and Economics, Alzahra University, Tehran, Iran

https://doi.org/10.22056/ijir.2023.01.04

Abstract

BACKGROUND AND OBJECTIVES: The insurance industry in every country is one of the most important financial institutions active in the financial markets, especially the capital market. In addition to providing security for economic activities, the industry can play a very important key and decisive role in the mobility and dynamics of financial markets and the provision of investment funds by providing insurance services. Although this industry leads to an increase in productivity in other economic sectors by smoothing the ways of investment, reducing investment and participating in the investment of technical reserves, but the growth and development of other economic sectors also strengthens and develops the insurance industry. Assessment of the research background shows that most of the research conducted in this field has examined the role of the insurance industry in the country's macroeconomic economics or evaluating the insurance penetration rate in the economy, but comprehensive research on the impact of the insurance industry on economic investment not caried out so far. Therefore, the present study seeks to fill the role and effect of this industry by filling this vacuum. Therefore, the purpose of this study is to investigate the impact of the insurance industry on investment in the Iranian economy during the period of 1357-99.
METHODS: The present research is descriptive, analytical and correlational in terms of methodology and applied research in terms of nature. In order to investigate the impact of the insurance industry on investment in the Iranian economy by documentary method and by referring to the subject literature and research conducted in this field, an experimental model has been specified and by using statistical information collected for research variables for the period 1357-99 from databases (Statistics Center, Central Bank and Central Insurance of the Islamic Republic of Iran) At a constant price in 1390, The specified model has been estimated and tested using the method of Autoregressive Distributed Lags (ARDL) models and using econometric software Eviews 12. The error correction model (ECM) was used to investigate the short-term dynamics of the estimated model.
FINDINGS: The results show that the first interruption of investment has a positive and significant impact on the amount of investment. Also, the share of insurance componies by the final markeet capital has a positive and signification impact on the Amount of Economic Investment. Although the impact of interest rates on investment is negative, it is not statistically significant. But the exchange rate has had a positive and significant impact on the amount of investment. In fact, the impact of the interruptions of this variable on negative investment has been evaluated. The effect of inflation and GDP on the amount of investment in accordance with expectations is theoretical but not statistically significant. The results also showed that the ECM coefficient is statistically significant and is high towards the long-run relationship due to the sign and amount of the adjustment velocity coefficient; So that if the specified and estimated model leaves its long-run equilibrium relationship, it will return to equilibrium after about a period.
CONCLUSION: Due to the positive effect of the insurance industry on the country's investment capacity, which takes place through two ways of direct entry into financing and investment activities and indirect operation through the creation of certainty and facilitation of investment activities, the supervisory body and other insurance industry activists are required to improve the role of this industry as an investor and financier, Through increasing the share of life insurance in portfolio of the industry, in order to have more long-term resources at the disposal of the industry. Also, in order to promote the role of the insurance industry in order to create certainty environment and facilitate investment activities, the supervisory body and all the industry activists to launch and promote insurance fields such as commercial credit insurance, bond credit insurance, cash loan credit insurance, debtor's life credit insurance, sickness and accident credit insurance, accounts receivable credit insurance, involuntary unemployment credit insurance, property credit insurance, stock insurance, and bank deposit insurance.

Keywords

Main Subjects

Economics of finance / insurance

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Iranian Journal of Insurance Research

The Impact of the Insurance Industry on Investment in the Iranian Economy

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Volume 12, Issue 1 - Serial Number 43
February 2023
Pages 37-50

The Impact of the Insurance Industry on Investment in the Iranian Economy

References

References

Letters to Editor

Send comment about this article

Volume 12, Issue 1 - Serial Number 43February 2023Pages 37-50

Volume 12, Issue 1 - Serial Number 43
February 2023
Pages 37-50