Therefore since 42 ie number of countries is substantially higher than

Therefore since 42 ie number of countries is

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Therefore, since 42 (i.e. number of countries) is substantially higher than corresponding number of years (i.e. 11 or 2004 to 2014) in each cross section, the adopted estimation strategy is appropriate. It follows that the N(42)>T(11) condition for the employment of the GMM approach is fulfilled. Second, given that persistence is also a condition for the adoption of the GMM technique, we explore the nexuses between the identified inequality indicators and their first lags to confirm that the corresponding correlations are higher than the rule of thumb threshold of 0.800 used to ascertain the persistence of an outcome variable in the extant GMM and inequality literature (Tchamyou et al., 2019b). Accordingly, the study finds that the corresponding correlations for the Atkinson index, the Palma ratio and the Gini
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10 coefficient are respectively, 0.958, 0.964 and 0.918. Third, the panel nature of the data structure allows the estimation approach to account for cross-country differences in the specifications. Fourth, the concern of endogeneity is addressed from two main perspectives. On the one hand, the issue of reverse causality or simultaneity is tackled by using internal instruments. On the other hand, by involving time invariant indicators in the conditioning information set, the estimation captures the unobserved heterogeneity. In the light of narratives that traditional GMM approaches produce less efficient estimated coefficients, this study adopts the Roodman (2009a, 2009b) extension of Arellano and Bover (1995) because it has been established to produce more efficient estimates and restrict instrument proliferation (Love & Zicchino, 2006; Baltagi, 2008; Asongu & Nwachukwu, 2016b; Boateng et al., 2018). The following equations in level (1) and first difference (2) summarise the standard systemGMM estimation procedure. tititihhhtitititiWISISISII,,,21,3,2,10,(1) )()()()()()(,,2,,,,21,,3,,22,,1,,tititttihtihhhtitititititititiWWISISISISISISIIII(2) where, tiI,is an inequality indicator (i.e. Gini coefficient, Atkinson index and Palma ratio) of country iin period t, 0is a constant,ISentails insurance (life insurance and non-life insurance), ISISdenote quadratic interactions between insurance premiums (“life insurance× life insurance”, “non-life insurance× non-life insurance”), Wis the vector of control variables (remittances and financial depth),represents the coefficient of auto-regression which is one within the framework of this study because a year lag is enough to capture past information, tis the time-specific constant,iis the country-specific effect and ti,the error term. Consistent with the attendant literature, the study discusses identification and exclusion restrictions properties underpinning the GMM strategy (Tchamyou & Asongu, 2017; Tchamyou et al., 2019). These are essential for robust GMM estimations. All
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