An Empirical Study of Relationships between Islamic Insurances and Economic Growth
Karin Amelia Safitri

Karin Amelia Safitri, Study Program of Insurance Administration and Actuary, University of Indonesia, Kampus UI, Depok, Jawa Barat, Indonesia.
Manuscript received on 07 May 2019 | Revised Manuscript received on 19 May 2019 | Manuscript Published on 23 May 2019 | PP: 1036-1043 | Volume-7 Issue-6S5 April 2019 | Retrieval Number: F11780476S519/2019©BEIESP
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Abstract: This study aims to examine simultaneous relationships between Islamic insurance demand and economic growth in Indonesia during the period of 2002-2015. This study will also evaluate statistical models by incorporating other variables such as gross premium income, gross domestic product, the percentage of poverty, dependancy ratio and rate of inflation. The relationships among those variables were analyzed using the simultaneous equation model whereas the parameters have been estimated using the two stage least squares technique. The result shows that for the economic growth model, there are only two variables i.e gross domestic product and dependency ratio which contribute significantly to the economic growth. On the other hand, the inflation variable does not affect the growth since the p-values are equal to 0,66. Moreover, the variables affecting the Islamic insurance demand are the economic growth, inflation rate and dependancy ratio with p-values equal to 0,01, 0,09 and 0,03 respectively. The simultaneous model gives the result that significant Islamic insurance demand affects the economic growth at α = 10%, but economic growth does not affect Islamic insurance premium income.
Keywords: Economic Growth, Islamic Insurance, Simultaneous Equation Model.
Scope of the Article: Computational Economics, Digital Photogrammetric