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Fund Mobilization by Insurance Companies and Fixed Capital Formation: Evidence from the Nigerian Economy

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  • Lezaasi Lenee Torbira
  • Onyemachi Maxwell Ogbulu

Abstract

This paper is an empirical investigation into the relationship between fund mobilization by insurance companies and gross fixed capital formation (GFCF) in Nigeria and specifically how the latter responds to stimuli emanating from the insurance companies. A five variable-predictor multivariate regression model was estimated and analyzed. The short run results reveal that four explanatory variables namely: premium from fire, accidents, motor vehicles and employee liabilities insurance policies positively and insignificantly correlate with Gross Fixed Capital Formation while the relationship between premium from marine insurance policies and GFCF is both negative and insignificant. In the long run, the fund mobilization variables by insurance companies positively and significantly impact on the growth of gross fixed capital formation. In addition, the Granger causality test provides no evidence of causality among the variables. The paper therefore recommends the formulation and implementation of policy measures that will increase insurance penetration, improve insurance fund mobilization and enlarge the insurance market in Nigeria.

Suggested Citation

  • Lezaasi Lenee Torbira & Onyemachi Maxwell Ogbulu, 2014. "Fund Mobilization by Insurance Companies and Fixed Capital Formation: Evidence from the Nigerian Economy," International Journal of Financial Research, International Journal of Financial Research, Sciedu Press, vol. 5(2), pages 69-78, April.
    • Handle: RePEc:jfr:ijfr11:v:5:y:2014:i:2:p:69-78
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    References listed on IDEAS

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    Cited by:

    1. Bhasela Yalezo & Bokana G K, 2018. "Determinants of Eastern Cape Gross Fixed Capital Formation and Its Impact on the South African Economic Performance," Journal of Economics and Behavioral Studies, AMH International, vol. 10(4), pages 32-44.

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