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| Abstract : Universiti Pendidikan Sultan Idris |
| The focal aim of this paper is to examine the relationship between government expenditure on health and administration on education, and insurance demand in Malaysia. Specifically, this study examined the short- and long-run impacts of gross domestic product, inflation rate, government health expenditure, government education expenditure and real interest rate on insurance demand in the country. The study focus on Malaysia, was mainly due to the substantial income generated through insurance demand since the COVID-19 pandemic in 2019. Time series data, spanning December 1990 to December 2022, were utilised. This study adopted the linear ARDL approach to identify the short- and long-run impact between observed variables. Specifically, the study examined whether the observed variables significantly affect insurance demand in Malaysia. The initial estimation model was subsequently divided onto two specification model, namely health model and education model. The results suggest that the health and education expenditures exerted significant impact on insurance demand in Malaysia. The error correction term (ECT) was found significant and was constantly negative indicating the existence of a long-term relationship between explanatory variables and insurance demand. By implication, the education and health spending by the government showed positively significant impact on insurance demand in the long-run thus indicating high dependency of the insurance industry on the governments financial competence. The more the government spends on the education and health sectors, the larger the insurance industry will grow. Therefore, a strengthened financial system may serve as a catalyst for the wellbeing of the insurance industry in Malaysia in the long-term. Likewise, the strength of the country's economy will also be sustained. 2023 Penerbit Universiti Kebangsaan Malaysia. All rights reserved. |
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