Insurance Companies Financial Intermediation and Economic Growth in Nigeria

This study seeks to determine the contribution of revenue from insurance sector investments to GDP of Nigeria economy. The variables under investigations are insurance investment in Government securities, cash deposits, real estates and mortgages, stocks and bonds. This study adopted the Ex-post facto research method, the data are secondary sourced from: (i) CBN statistical bulletin, (ii) Nigeria Stock Exchange Fact Book (iii), National Bureau of Statistics Annual Abstracts. Covering the period of 34 years, time series and the rate of change data are expressed on a yearly basis. The study sampled 61 insurance companies whose securities are traded in the Nigerian Stock Exchange and 7 pension fund administrators operating in Nigeria. This study employed descriptive statistics to analyze the variables. Ordinary-Least-Square statistical technique is adopted to give the best linear unbiased estimates. Johansen Cointegration is used to estimate the models, Unit-Root-Test is adopted to prevent spurious regression which may arise as a result of carrying out regression on cross sectional data, by encompassing the Augmented Dickey Fuller (1979). Granger Causality test smoothens the short-run destabilization or distortion when analyzing short-run or long-run data which might be a long-run negative or a short-run positive. From the study it was discovered that in the short-run and long-run all variables appeared to be statistically insignificant to Economic growth in the nation with the exception of insurance investment in Government securities. Amongst others, it was recommended that Sustained policies aimed at increasing the wealth allocations to investments with proper mix of such investment portfolios to cover small and medium scale enterprises, short term loans to business firms that qualify for such facilities, and to incorporate finance and insure products to broaden their income base.