Regression without insurance density and endogeneity test of insurance density

For testing the impact of insurance development on the growth of an economy, we conduct a series of regressions excluding the insurance density from the explanatory variables. The statistics of those regressions are given in Table 3. If the regressors include all economic factors, which are gross enrolment ratio of tertiary students lagged 2, inflation rate, trade balance, and gross fixed assets investment, the sign of the coefficient of gross enrollment ratio of tertiary students lagged 2 is positive, which is reasonable. If regressing inflation rate and gross fixed assets investment separately with gross enrollment ratio of tertiary students lagged 2 one by one into the regressors, we can have reasonable regressions. If we put trade balance and gross enrollment ratio of tertiary students lagged 2 together into regressors, the coefficient of trade balance is negative, which is not reasonable. However, the R2 of all those regressions are lower than the corresponding regressions including insurance density. It has demonstrated that insurance development really improves the economic growth. In fact, in the history of human economic society, investment and demand take the first position to promote the economic growth, and then for the long run come the education and technique innovation. These factors do not exclude the positive impact of the development of insurance on economic growth, at least it improves the economic growth, in term of promoting the society stability and security. This paper argues that insurance density with other important variables really improve the economic growth, in another words, it has a positive impact on economic growth. For testing the endogeneity of insurance density, we implement theHausman test. The result shows the insurance density is very significantly endogenous. Therefore in the next regression we use GMM method in the dynamic panel modeling.