Impact of banking sector development on insurance market-growth nexus: the study of Eurozone countries

We examine the relationships between the banking sector development, insurance market development and economic growth of the Eurozone countries between 1980 and 2015. Using the vector error correction model, the study shows that in the long run, banking sector development and insurance market development have a significant impact on economic growth of European countries. In the short term, we find both unidirectional and bidirectional causality between the three. Based on the empirical findings, a focus must be given to banking sector development and insurance market development in order to create sustained economic growth in an increasingly inter-connected world.