Financial Sector Policies and Economic Growth: Evidence From Insurance Sector in Nigeria

Abstract

This study investigated the financial sector policies and economic growth link in Nigeria with a focus more on the insurance sub-sector. The study adopted the time series research design, where data for evaluation covering the period 2010 to 2018 were obtained from several editions of the Central Bank of Nigeria (CBN) Statistical Bulletin. Gross capital formation, total insurance premium and total insurance investment were used to represent financial sector policies, while gross domestic product was used as proxy for economic growth. Data were analyzed using descriptive statistics and multiple regression technique assisted by E-views 10 software. The study found that gross capital formation and total insurance investment were significantly related to gross domestic product, while total insurance premium had insignificant effect on GDP. Also, gross capital formation and total insurance premium had negative effect on GDP, but total insurance investment was positively related to GDP. The study concluded that financial sector policies made statistically substantial contribution to the growth of the Nigerian economy with a coefficient of determination and probability of F-statistics values of 0.99246 and 0.00001 (less than 0.05 level of significance) respectively. It is therefore recommended that the regulatory authorities should put in place policies to make it attractive for Nigerians to patronize insurance business as this would translate to increased insurance investment and further result to growth of the Nigerian economy since insurance investment was found to have positive link with gross domestic product.

Insurance Sector Development and Economic Growth: Empirical Analysis from Nigeria

“…Economic growth, according to Ogunlokun and Adeleke [7], is a process in which an economy's drivers improve through time, resulting in an increase in national income levels. Hence, in this study, economic growth is one of the variables to be measured and the study agrees with the foregoing submission of Etale and Edoumiekumo [13] and measures economic growth using real Gross Domestic Product of Nigerian Economy as this is the most popular metric of economic growth found in the literature.…”

“…Insurance, according to Etale and Edoumiekumo [13], is the business of guiding against the risk of unknowns and minimizing the risk for the both insured party and third parties. Insurance is a business that protects individuals and businesses against the occurrence of an uncertain event in the future.…”

“…Insurance is a business that protects individuals and businesses against the occurrence of an uncertain event in the future. According to Etale and Edoumiekumo [13], the provision of coverage from unexpected occurrences can lead to payments of claims by the insurer and in exchange for which premiums are received from the insured. Insurers collect premiums from their customers, which serves as a source of gross capital formation.…”

“…In addition, the study of Okoye and Ogbogu (2020) was the only one that incorporated total insurance assets into their study despite the importance of this variable in the operational development of insurance business, even at that, the scope of the study was equally not up to date as it terminated in 2018. In addition, it was obvious from the reviewed literature that majority of the existing studies were not up to date in their data collection and analysis; this is because most recent studies in the literature terminated data collection in 2018 [13,9]. Thus, unless an up to date data are collected and analyzed, and other performance indicators of insurance industry are empirically studied, there cannot be concrete and reliable evidence in respect to the association between insurance development in Nigeria and economic growth; as such, policy makers, academia insurance practitioners cannot be properly and accordingly guided.…”

Impact of Insurance Companies Investment on Bank Liquidity and Economic Growth of Nigeria

“…Furthermore, GCF and total insurance premium presented insignificant negative effect on GDP, while the total insurance investment had positive relationship to GDP. The study concluded that financial sector policies demonstrated statistically significant contribution to economic growth with a coefficient of determination and probability of F-statistics values of 0.99246 and 0.00001 0.05 levels of significance respectively [6].…”