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This study aims to explore the short-run and long-run relationships and causality between economic growth and financialization in the new member states (NMS-11) and to provide some policy implications drawn from the empirical findings.

The autoregressive distributed lag (ARDL) bounds test approach to cointegration with the vector error correction model and the cumulative sum of squares (CUSUMQ) test for stability of functions is used between 1995q1 and 2021q4 to examine the existence of cointegration, relationships and causality between economic growth and financialization.

The findings of the ARDL bounds test demonstrate that the variables included in the models are bound together in the long run, as confirmed by the associated equilibrium correction. The estimated models indicate that the association between selected variables and economic growth is stronger and more statistically significant in the short run compared with the long run. Also, for NMS-11 understudied countries, short-run causality prevails over long-run causality. The changes in the level of financialization have a significant negative effect on the growth rates in the short run, which aligns with findings from previous empirical studies.

This study extends the existing very limited literature about short-run and long-run relationships and causality among economic growth and financialization, including inflation and unemployment variables, to determine their link in the NMS-11. Specifically, the present study reveals that the current level of financialization hampers economic growth and promoting such economic policies further can have adverse effects on the overall economic growth.

Introduction: The possible role of foreign direct investments (FDIs) in the insurance services industry has not received much research compared to the banking industry. The FDI inflows are seen as crucial to the general economic growth of these emerging European transition countries because the insurance sector is still growing and integrating.

Purpose: This chapter explores whether the increase in FDI inflows leads to higher life and non-life insurance penetration in different groups of European transition countries and European post-transition countries.

Methodology: The study employs annual data between 1995 and 2021 using dynamic ordinary squares (DOLS) estimator and Dumitrescu and Hurlin (2012) panel causality methods.

Findings: The study found evidence about the link between FDI and life and non-life insurance penetration, where their gains are marginal and very weak when controlling the effect of Gross Domestic Product per capita (GDPPC) in the long run. More specifically, the effect of FDI on insurance development is greater in the European post-transition countries with higher GDPPC and FDI inflows than in the European transition countries.

These discrepancies may be attributed to the various stages at which their development policies have advanced as well as the overall execution of reforms within the insurance industry. The findings suggest affirmative action programs should be put in place to attract FDI inflows in general and insurance in particular.