IDEAS home Printed from https://ideas.repec.org/a/bcp/journl/v7y2023i10p790-800.html
   My bibliography  Save this article

Insurance Penetration and Interest Rate Nexus in Nigeria; an Autoregressive Distributed Lag Approach

Author

Listed:
  • Uruakpa Chiagoziam Gospel PhD

    (Department of Economics, Rhema University Nigeria)

  • Kenneth C Kama

    (Department of Economics, University of Nigeria)

  • Odionye Joseph C. PhD

    (Department of Economics, Abia State University, Nigeria)

  • Uzoma Kelechi P

    (Department of Economics, Rhema University Nigeria)

Abstract

This study investigated the effect of interest rate on insurance penetration in Nigeria. Interest rate is a vital monetary instrument that helps in macroeconomic stability through proper mobilization and distribution of capital. It’s adjustment affects both banking industry as well as the non – banking financial institutions such as the insurance industry. For developing countries like Nigeria with social and economic problems, the issue of risk management and insurance services as related to economic stability is relatively determined by the structural arrangement of the insurance sector and such arrangement is relative to the performance of all economic actors and the overall social environment The study used Auto Regressive Distributed Lag (ARDL) bounds test approach. Data was sourced from the central bank of Nigerian statistical bulletin for the period of 1985 to 2019. The result indicated that an increase in interest rate significantly decrease the rate of insurance penetration in both short run and long run. Other control variables used are exchange rate and inflation rate, and the result for this variables indicates that exchange rate has a significant relationship whereas inflation rate has an insignificant relationship with insurance penetration. The result of the co-integrating equation indicates that every movement into disequilibrium is corrected for within one period at a significant rate. The study therefore suggested that prior to any adjustment in the monetary policies or other economic policy, a detailed investigation should be carried out to ensure a favorable compliance of the short run and long run effect of adjusting such on the macroeconomic indices and insurance penetration.

Suggested Citation

  • Uruakpa Chiagoziam Gospel PhD & Kenneth C Kama & Odionye Joseph C. PhD & Uzoma Kelechi P, 2023. "Insurance Penetration and Interest Rate Nexus in Nigeria; an Autoregressive Distributed Lag Approach," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 7(10), pages 790-800, October.
    • Handle: RePEc:bcp:journl:v:7:y:2023:i:10:p:790-800
    as

    Download full text from publisher

    File URL: https://www.rsisinternational.org/journals/ijriss/Digital-Library/volume-7-issue-10/790-800.pdf
    Download Restriction: no
    File URL: https://www.rsisinternational.org/journals/ijriss/articles/insurance-penetration-and-interest-rate-nexus-in-nigeria-an-autoregressive-distributed-lag-approach/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Philip Chimobi Omoke, 2012. "Insurance Market Activity and Economic Growth: Evidence from Nigeria," Acta Universitatis Danubius. OEconomica, Danubius University of Galati, issue 2(2), pages 34-47, April.
    2. World Bank, 2016. "World Development Indicators 2016," World Bank Publications - Books, The World Bank Group, number 23969.
    3. Massomeh Hajilee & Omar M. Al Nasser, 2017. "The Impact Of Interest Rate Volatility On Stock Market Development: Evidence From Emerging Markets," Journal of Developing Areas, Tennessee State University, College of Business, vol. 51(2), pages 301-313, April-Jun.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Mehmet Balcilar & Rangan Gupta & Chien-Chiang Lee & Godwin Olasehinde-Williams, 2020. "Insurance-growth nexus in Africa," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 45(2), pages 335-360, April.
    2. Sunder Ramaswamy & Abishek Choutagunta & Santhosh K. Sahu, 2016. "Evaluating Asian FTAs: What do Gravity Equation Models Tell Us?," Working Papers id:11377, eSocialSciences.
    3. Jan Fagerberg & Bengt-Åke Lundvall & Martin Srholec, 2018. "Global Value Chains, National Innovation Systems and Economic Development," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 30(3), pages 533-556, July.
    4. Jarosz-Angowska, Aneta & Kąkol, Magdalena, 2016. "Comparative Analysis of Support to Agriculture in the QUAD Countries in 1986-2014," Problems of World Agriculture / Problemy Rolnictwa Światowego, Warsaw University of Life Sciences, vol. 16(31), pages 1-15, December.
    5. Bahta, S. & Temoso, O. & Mekonnen, D. & Malope, P. & Staal, S., 2018. "Technical efficiency of beef production in agricultural districts of Botswana: A Latent Class Stochastic Frontier Model Approach," 2018 Conference, July 28-August 2, 2018, Vancouver, British Columbia 277207, International Association of Agricultural Economists.
    6. Keller, Wolfgang & Utar, Hale, 2023. "International trade and job polarization: Evidence at the worker level," Journal of International Economics, Elsevier, vol. 145(C).
    7. Chrysovalantis Amountzias, 2018. "The Effects of Competition, Liquidity and Exports on Markups: Evidence from the UK Food and Beverages Sector," Journal of Industry, Competition and Trade, Springer, vol. 18(2), pages 187-208, June.
    8. Almeida, Alexandre N. & Bravo-Ureta, Boris E., 2019. "Agricultural productivity, shadow wages and off-farm labor decisions in Nicaragua," Economic Systems, Elsevier, vol. 43(1), pages 99-110.
    9. Bruno Lanz & Simon Dietz & Tim Swanson, 2018. "Global Economic Growth and Agricultural Land Conversion under Uncertain Productivity Improvements in Agriculture," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 100(2), pages 545-569.
    10. Dreher, Axel & Fuchs, Andreas & Langlotz, Sarah, 2019. "The effects of foreign aid on refugee flows," European Economic Review, Elsevier, vol. 112(C), pages 127-147.
    11. Sajid Mohy Ul Din & Arpah Abu-Bakar & Angappan Regupathi, 2017. "Does insurance promote economic growth: A comparative study of developed and emerging/developing economies," Cogent Economics & Finance, Taylor & Francis Journals, vol. 5(1), pages 1390029-139, January.
    12. Wigley, Simon, 2017. "The resource curse and child mortality, 1961–2011," Social Science & Medicine, Elsevier, vol. 176(C), pages 142-148.
    13. Iseghohi Judith Omon, 2021. "Migrant Remittances and Health Outcomes in the West Africa Monetary Zones (WAMZ)," Romanian Economic Journal, Department of International Business and Economics from the Academy of Economic Studies Bucharest, vol. 24(81), pages 15-32, September.
    14. David, Oladipo Olalekan, 2019. "Nexus between telecommunication infrastructures, economic growth and development in Africa: Panel vector autoregression (P-VAR) analysis," Telecommunications Policy, Elsevier, vol. 43(8), pages 1-1.
    15. Markus Brueckner & Ngo Van Long & Joaquin L. Vespignani, 2020. "Non-Gravity Trade," Globalization Institute Working Papers 388, Federal Reserve Bank of Dallas.
    16. Abdul Malik Iddrisu & Michael Danquah & Peter Quartey, 2017. "Analysis of School Enrollment in Ghana: A Sequential Approach," Review of Development Economics, Wiley Blackwell, vol. 21(4), pages 1158-1177, November.
    17. Tanu M Goyal & Arpita Mukherjee, 2017. "Trade Agreements and Services Value Chain: The Case of India and Thailand," Applied Finance and Accounting, Redfame publishing, vol. 3(1), pages 11-23, February.
    18. Malerba, Daniele, 2020. "Poverty alleviation and local environmental degradation: An empirical analysis in Colombia," World Development, Elsevier, vol. 127(C).
    19. Dorsch, Michael T. & Maarek, Paul, 2020. "Economic downturns, inequality, and democratic improvements," European Journal of Political Economy, Elsevier, vol. 62(C).
    20. Muyambiri, Brian & Odhiambo, Nicholas M, 2017. "The causal relationship between financial development and investment in Botswana," Working Papers 22607, University of South Africa, Department of Economics.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bcp:journl:v:7:y:2023:i:10:p:790-800. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Dr. Pawan Verma (email available below). General contact details of provider: https://rsisinternational.org/journals/ijriss/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.