A Theoretical Basis For Innovation, Institutions And Insurance Penetration Nexus
DOI:
https://doi.org/10.14738/assrj.84.9796Keywords:
Institutions, New Institutional Economies, Innovation, Insurance, Penetration.Abstract
Insurance is one of the systematic solutions to risk reduction available in the modern world. Its contribution to socio-economic development is difficult to overestimate, bearing in mind that the level of diversity and inclusion of the sector explains the degree of financial progress of a nation. This paper has a twofold objectives of ascertaining and discussing an overview of theories that stimulate economic performance from the angles of institutions and innovation. Keywords were used to search literature repository with the aid of Harzing’s publish or perish software. As a result of this process, the New Institutional Economics (NIE) and Schumpeter’s theory of Innovation found suitable to the objectives of the study. The paper concludes that efficient institutions coupled with the emergence of the novel products may likely promote trust and confidence in the market as well as specific needs of the large majority unserved potential consumers. Therefore, interaction between institutions and innovation could likely trigger insurance uptake.
References
Adetunji, A. L., Nwude, E. C., & Udeh, S. N. (2018). Interface of Insurance and Economic Growth: Nigerian Experience. International Journal of Economics and Financial Issues, 8(4), 16-26. www.econjournals.com
Agyemang, O. S., Gatsi, J. G., & Ansong, A. (2018). Institutional structures and financial market development in Africa. Cogent Economics & Finance, 61(1), 1-14. https://doi.org/10.1080/23322039.2018.1488342
Alsahlawi, A. M. (2018). The Effect of Institutional Factors on the Profitability Risk in the Insurance Companies Listed in the Saudi Stock Market. International Business Research, 11(7), 12-19.
Alston, L. J. (2008). New institutional economics. The new Palgrave dictionary of economics, 1-11.
Arych, M., & Darcy, W. (2020). General trends and competitiveness of Australian life insurance industry. Journal of International Studies, 13(1), 212-233. https://doi.org/10.14254/2071-8330.2020/13-1/14
Arzenšek, M., Bider, D., & Ferjančič, U. (2016). Institutions and Economic Development: A More Complete View to Understanding Economic Growth Review of Economics and Economic Methodology, 1(1), 70-87.
Awokuse, T. O., & Xie, R. (2015). Does agriculture really matter for economic growth in developing countries?", . Canadian Journal of Agricultural Economics/Revue Canadienne D'agroeconomie, 63 (1), 77-99.
Bara, A., & Mudzingiri, C. (2016). Financial Innovation and Economic Growth: evidence from Zimbabwe. Investment Management and Financial nnovations, 13(2), 65-75. https://doi.org/10.21511/i mfi .13(2).2016.07
Bbale, J. M., & Nnyanzi, J. B. (2016). How do Liberalization, Institutions and Human Capital Development affect the Nexus between Domestic Private Investment and Foreign Direct Investment? Evidence from Sub-Saharan Africa. Global Economy Journal, 16(3), 569-598.
Boutillier, S. (2019). The Economics of the Entrepreneur and the Banker Historical Roots and Contributions to the Management of Innovation. European Journal of Innovation Management, 23 (2), 230-250. https://doi.org/10.1108/EJIM-08-2018-0184
Bunge, M. (2000). Ten modes of individualism—none of which works—and their alternatives. Philosophy of the social sciences, 30(3), 384-406.
Burma, S. (2018). Egypt's success and Africa's failure - how to explain different development trajectories in (tilapia) aquaculture: A case study of the (tilapia) aquaculture industry development in Africa The Norwegian College for Fishery Science (NCFS)].
Castellano, F. L., & García-Quero, F. (2012). Institutional Approaches to Economic Development: The Current Status of the Debate. Journal of Economic Issues, 46(4), 921-940. https://doi.org/10.2753/JEI0021-3624460405
Chen, S., Chen, Y., Feng, Z., Chen, X., Wang, Z., Zhu, J., Jin, J., Yao, Q., Xiang, L., & Yao, L. (2020). Barriers of effective health insurance coverage for rural-to-urban migrant workers in China: a systematic review and policy gap analysis. BMC public health, 20, 1-16.
Cortés-Jiménez, I., Pulina, M., & Riera, C. A., M. (2009). Tourism and Exports as a means of growth (IREA Working Papers No.200910).
Dragos, S. L., Mare, C., & Dragos, C. M. (2019). Institutional drivers of life insurance consumption: a dynamic panel approach for European countries. Geneva Papers on Risk and Insurance -Issues and Practice, 44(1), 36-66. https://doi.org/10.1057/s41288-018-0106-3 69
Dragos, S. L., Mare, C., Dragota, I.-M., Dragos, C. M., & Muresan, G. M. (2017). The nexus between the demand for life insurance and institutional factors in Europe: new evidence from a panel data approach. Economic Research-Ekonomska Istraživanja, 1-20. https://doi.org/10.1080/1331677X.2017.1325764
Fashagba, M. O. (2018). The impact of insurance on economic growth in Nigeria. Afro Asian Journal of Social Sciences, 9(1), 1-10.
Faundez, J. (2016). Douglass North’s theory of institutions: lessons for law and development. Hague Journal on the Rule of Law, 8(2), 373-419.
Fritsch, M. (2017). The theory of economic development – An inquiry into profits, capital, credit, interest, and the business cycle. Regional Studies, 1-3. https://doi.org/10.1080/00343404.2017.1278975
Gaganis, C., Hasan, I., & Pasiouras, F. (2019). Cross-country evidence on the relationship between regulations and the development of the life insurance sector. Economic Modelling, 1-61. https://doi.org/10.1016/j.econmod.2019.10.024
Gennaioli, N., Porta, R. L., Lopez-de-Silanes, F., & Shleifer, A. (2020). Trust and Insurance Contracts (0898-2937).
Hassan, H. A., Abbas, S. K., & Zainab, F. (2018). Anatomy of Takaful. Global Scientific Journal, 6(3), 143-155.
Hong, J., & Seog, S. H. (2018). Life insurance settlement and the monopolistic insurance market. Insurance: Mathematics and Economics, 81, 36-50.
John, F., Toth, R., Frank, K., Groeneveld, J., & Müller, B. (2019). Ecological vulnerability through insurance? Potential unintended consequences of livestock drought insurance. Ecological Economics, 157, 357-368.
Kaya, P. H. (2015). Joseph A. Schumpeter’s Perspective on Innovation. International Journal of Economics, Commerce and Management, III(8), 25-37.
Kherallah, M., & Kirsten, J. F. (2002). The New Institutional Economics: Applications for Agricultural Policy Research in Developing Countries: “New institutional economists are the blue-collar guys with a hearty appetite for reality.” Oliver Williamson, 2000a. Agrekon, 41(2), 110-133.
Koijen, R. S., & Yogo, M. (2016). Shadow insurance. Econometrica, 84(3), 1265-1287.
Kumar, S., Chandra, N., & Kumar, P. (2020). Insurance Consumption and Economic Growth in the Post-Liberalized India: An Empirical Analysis. Asian Economic and Financial Review, 10(2), 218-228. https://doi.org/10.18488/journal.aefr.2020.102.218.228
Kyerematen, S. (2015). Africa’s low insurance coverage: Apathy or ignorance? Activa http://www. activa-ghana. com/news/africas-low-insurance-coverage-apathy-or-ignorance (Accessed: 19/06/2018).
Laeven, L., Levine, R., & Michalopoulos, S. (2015). Financial innovation and endogenous growth. Journal of Financial Intermediation, 24(1), 1-24. https://doi.org/10.1016/j.jfi.2014.04.001
Lin, H.-C., & Huang, J.-C. (2020). The Effect of Information Transparency on Stock Prices of Financial Institutions: Evidence From Taiwan. International Journal of Organizational Innovation (Online), 12(3), 208-217.
Malerba, F., & McKelvey, M. (2020). Knowledge-intensive innovative entrepreneurship integrating Schumpeter, evolutionary economics, and innovation systems. Small Business Economics . 54, , 503–522. https://doi.org/10.1007/s11187-018-0060-2
Mamaril, K. A. (2019). An institutional perspective on the energy, water and food nexus in Australia University of Technology ]. Sydney.
Matthews, R. C. (1986). The economics of institutions and the sources of growth. The Economic Journal, 96(384), 903-918.
Michalopoulos, S., Laeven, L., & Levine, R. (2009). Financial Innovation and Endogenous Growth. National Bureau of Economic Research. http://www.nber.org/papers/w15356.
Mnykh, M. (2017). Competition In the Insurance Market of Ukraine and the Peculiarities of Its Control. Priority research areas, 79. 70
Mohammed, S. A. S. A. (2019). Nonfinancial Determinants and economic fluctuations: evidence from Yemen. International Journal of Ethics and Systems,, 35(3 ), 376-391. https://doi.org/10.1108/IJOES-01-2019-0011
Nabli, M. K., & Nugent, J. B. (1989). The new institutional economics and its applicability to development. World Development, 17(9), 1333-1347.
Nguyen, A. N., & Nguyen, T. H. (2007). Foreign Direct Investment in Vietnam: An Overview and Analysis the Determinants of Spatial Distribution Across Provinces. Public Choice & Political Economy eJournal.
North, D. C. (1990). Institutions, institutional change and economic performance. Cambridge University Press https://doi.org/10.1017/CBO9780511808678
Okonkwo, I. V., & Okeke, D. C. (2019). Developments and innovations in Nigerian insurance industry: 2010-2018. International Journal of Research in Business, Economics and Management, 3(1), 105-121. www.ijrbem.com
Okwor, D. A. (2019). What determines, using the new institutional economic approach, the development of the Microinsurance sector in lessdeveloped countries, and what is its role for economic growth in such countries? Technical University ]. Bergakademie Freiberg.
Ostagar, A. M. (2018). Impact of Technology and Innovation in Insurance Sector International Journal of Management, IT & Engineering, 8(12), 253-258.
Pereira, A. J., & Lopes, H. C. (2018). The market for the “old” and the “new” institutional economics. Brazilian Journal of Political Economy, 38(3), 450-468. https://doi.org/10.1590/0101-35172018-2774
Picot, A. (1997). Organization of electronic markets: Contributions from the new institutional economics. The Information Society, 13(1), 107-123. https://doi.org/10.1080/019722497129313
Porrini, D. (2017). Regulating Big Data effects in the European insurance market. Insurance markets and companies(8), 6-15.
Porter, M. E., & Stern, S. (1999). The New Challenge to America’s Prosperity: Findings from the Innovation Index. Washington, DC, USA.
Qamruzzaman, M., & Wei, J. (2018). Financial Innovation, Stock Market Development, and Economic Growth: An Application of ARDL Model. International Journal of Financial Studies, 6(3), 1-30. https://doi.org/10.3390/ijfs6030069
Rajapathirana, R. P. J., & Hui, Y. (2017). Relationship between innovation capability, innovation type, and firmperformance. Journal of Innovation & Knowledge., 3, 44-55. https://doi.org/10.1016/j.jik.2017.06.002
Rashid, N., Daud, W. N. W., Zainol, F. A., Salleh, F., Yazid, A. S., Endut, W. A., Yaakub, N., Ghazali, P. L., & Afthanorhan, A. (2018). Quality of Financial Reporting towards the Improvement Corporate Governance Mechanism. International Journal of Academic Research in Business and Social Sciences, 8(11), 1339–1345. https://doi.org/10.6007/IJARBSS/v8-i11/5175
Rimmer, D. (1961). Schumpeter and the underdeveloped countries. Quarterly Journal of Economics, 75(3), 422-450. https://doi.org/10.2307/1885132
Salleh, F., & Afthanorhan, A. (2018). Demographic Factors of Family Takaful Demand: A Literature Review. International Journal of Academic Research in Business and Social Sciences, 8(12), 613 – 621.
Salleh, F., Ibrahim, M. D., Yazid, A. S., Awang, Z., Afthanorhan, A., Rashid, N., & Ghazali, P. L. (2018c). Micro Small and Medium Enterprise Demand for General Takaful: Proposed Theoretical Framework and Hypotheses Development. International Journal of Academic Research in Business and Social Sciences, 8 (12), 599-612.
Salleh, F., Kassim, D. N. H. A., Yazid, A. S., & Rashid, N. (2018a). Consumer Behaviour and Insurance Claim Fraud in Malaysia. International Journal of Academic Research in Business and Social Sciences of Europe, 8(12), 586–598.
Salleh, F., Salahuddin, M. S. A., Jumali, N. A., A’ala, N. A. A., & Abdullah, M. F. (2018b). Prospect of a Flood Micro-Insurance in Malaysia: A Survey of Literatures. International Journal of Academic Research in Business and Social Sciences, 8(12), 517–527. https://doi.org/10.6007/IJARBSS/v8-i12/5051 71
Salman, S. A., Hassan, R., & Tahniyath, M. (2019). Takaful an Innovation to Contemporary Insurance. International Journal of Research in Social Sciences, 9 (8), 435-442.
Schneider, G., & Nega, B. (2016). Limits of the New Institutional Economics Approach to African Development. Journal of Economic Issues, 50(2 ), 435-443. https://doi.org/10.1080/00213624.2016.1176504
Schumpeter, J. (1934). The Theory of Economic Development. Harvard Univerrsity Press.
Sholoiko, A. (2018). Characteristic of American insurance market infrastructure. Sciences of Europe(23-2 (23)).
Sledzik, K. (2013). Schumpeter’s view on innovation and entrepreneurship. Faculty of Management Science and Informatics, . https://doi.org/10.2139/ssrn.2257783
Soares, C. (2018). The philosophy of Individualism: A critical Perspective. International Journal of Philosophy and Social Values, 1(1), 11-34.
Spithoven, A. (2019). Similarities and dissimilarities between original institutional economics and new institutional economics. Journal of Economic Issues, 53(2), 440-447.
Sweezy, P. M. (1943). Professor Schumpeter's Theory of Innovation. The Review of Economics and Statistics, 25(1), 93-96. https://doi.org/10.2307/1924551
Tamanaha, B. Z. (2015). The Knowledge and Policy Limits of New Institutional Economics on Development. Journal of Economic Issues, 49(1), 89-109. https://doi.org/10.1080/00213624.2015.101388
Ul Din, S. M., Abu-Bakar, A., & Regupathi, A. (2017). Does insurance promote economic growth: A comparative study of developed and emerging/developing economies. Cogent Economics & Finance, 5(1), 1390029.
Williamson, O. E. (2000). The new institutional economics: taking stock, looking ahead. Journal of economic literature, 38(3), 595-613.
Yazid, A. S., Jais, W. M., Jusoh, M. S., Daud, W. N. W., Salleh, F., Ali, E. A. T. E., Bello, B. A., Zainol, F. A., Norfadzilah, N. M., Rashid, N. M. R., Abdul, & Hamid, N. A. (2017). Islamic Personal Risk Management from Islamic Perspective. World Applied Sciences Journal, 35(9), 1885-1892. https://doi.org/10.5829/idosi.wasj.2017.1885.1892
Ying, L. (2020). Insurance and Medical Resource Allocation: A literature review. Advances in Social Sciences Research Journal,, 7(1), 1-9. https://doi.org/10.14738/assrj.71.7493
Yongjian, L., Ning, Y., & Xiaofang, D. (2005). A Study on the Relationship between Institutions and Economic Growth–The Case of Ningbo Hi-Tech Park. Master Dissertations, Kristianstad University.
Zaleska, M., & Kondraciuk, P. (2019). Theory and Practice of Innovation Development in the Banking Sector. Financial Sciences. Nauki O Finansach, 24(2). https://doi.org/10.15611/fins.2019.2.06
Zelizer, V. (1979). Morals and Markets: The Development of Life Insurance in the United States. NY: Columbia University Press.
Downloads
Published
How to Cite
Issue
Section
License
Copyright (c) 2021 Usman Ahmed Hafiz, Fauzilah Salleh, Murtala Garba
This work is licensed under a Creative Commons Attribution 4.0 International License.
