NIGERIAN JOURNAL OF CONTEMPORARY PUBLIC POLICY
Volume No: 11|
Page No: 87
| FullText PDF
Title: INFLUENCE OF INSURANCE COMPANIES INVESTMENT ON GROSS DOMESTIC PRODUCT (GDP) IN NIGERIA
1-&NBSP;HALIMAH SANI SAMBO 2-&NBSP;SALAMATU I. ISAH
1- DEPARTMENT OF BUSINESS ADMINISTRATION AHMADU BELLO UNIVERSITY, ZARIA
2-&NBSP;DEPARTMENT OF ECONOMICS AHMADU BELLO UNIVERSITY, ZARIA
The objective of this study is to empirically assess the effects of insurance investment on GDP in Nigeria. Globally, insurance investments have became center of attention in researchers and discussions among academics and analysts alike due to its importance not only to the individual companies but to the long run economic growth of the countries. As such, insurance investments have become an essential aspect of insurance literature. However, the consequence of insurance investment by asset type to the total contribution to Nigerians GDP using monthly data from 1996 to 2012 has not been empirically established. The study employed monthly time series data for the portfolio of investment within this period and the GDPt as its variables. Multiple regression model was utilized to estimate the relationship for the combine variables while linear regression for the total investment against GDP using Gretl- 1.9. 12 for the analysis. Consequently, the study concludes that the statistically positive R2 of 74% indicates a joint relationship between insurance investments and GDP in Nigeria. It was recommended that the increase in insurance investment that form its industry portfolio would maximize the investments and result to increase in economic development.
This study concludes that increased investment in insurance business in Nigeria would improve financial sector economic activities and as a result GDP would increase. Similarly, it goes to show that insurance business investment strategies need to be robust so as to guarantee a reasonable degree of hedge against investment risk which has been the bother of any fund for investment globally.
This study has far reaching policy implications because its findings imply that the current investment policy in the insurance industry is flexible enough to stimulate steady growth of funds especially in the long run. Thus, regulatory actions by NICOM should hamper on its investment in proper portfolios that would generate more returns for investors as well as improve the industry as it would increase financial sector funds. This would boost insured’s confidence in the insurance business. In line with the finding and conclusion, the study recommends that insurance awareness, appropriate fund management, efficient and effective insurance fund allocation (investment) should be encouraged while insurance policies should be created to accomplish their marked objectives in the economy.
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