1Associate Professor, Indian Institute of Foreign Trade, B-21, IIFT Bhawan, Qutab Institutional Area, New Delhi-110016, Email id: rsaradhi@iift.edu
2Assistant Professor, Indian Institute of Foreign Trade, B-21, IIFT Bhawan, Qutab Institutional Area, New Delhi-110016, jsymss@iift.edu
3Assistant Professor; Indian Institute of Foreign Trade, B-21, IIFT Bhawan, Qutab Institutional Area, New Delhi-110016, tpghosh@iift.edu
JEL Classification: G22, G28, C20, O16
The insurance sector plays a significant role in a country's economy as well as trade and development. The insurance sector facilitates financial intermediation, enables business and individuals manage their risk and channelizes savings into capital formation for the economy. The present paper is an attempt to ascertain the relation between a set of financial indicators with the performance of life insurance business in India. The life insurance premium to GDP has been used as a measure for the performance of insurance industry. While parameters such as mutual fund mobilisation as a ratio to GDP, volatility of the stock market, yield premium measured as the difference between yield on long term bonds and short term bonds, and market capitalisation as a ratio to GDP have been employed as financial indicators in this study. The study covers the period between 1990–91 and 2016–17. The results reveal that insurance premium is positively related to market capitalization to GDP (financial depth), volatility in the stock market and is inversely related to other investment avenues like mutual funds and interest rate.
Life insurance, financial depth, financial indicators, India
