The Demand Following Function of Insurance Investments on Nigerian Economic Growth: A Paradox Manifest
Suoye Igoni *
Department of Banking and Finance, University of Nigeria, Nsukka, Nigeria.
Ebi R. Odi
Department of Finance and Banking, University of Port Harcourt, Choba, Nigeria.
Chuke E. Nwude
Department of Banking and Finance, University of Nigeria, Nsukka, Nigeria.
*Author to whom correspondence should be addressed.
Abstract
The drive of this study is to link avenues of premium commitment within the ambit of Insurance ACT by insurance companies for risks and claims management, and to show its significant causal support on economic growth or the other way round. The perceived confidence loss and low awareness concerning insurance companies with regards to claims settlement that has engineered poor engagement for risk management professionals by Nigerians inspired for this study. The study, therefore, empirically examines the causal and significant support of insurance investments in government securities, stocks and bonds, and real estate and mortgage on gross domestic product in Nigeria. The Pairwise Causality was employed for the analysis, and the results signify feedback on-demand following function. The study concluded that insurance investment in government securities and stocks and bonds does not promote the output of goods and services in the Nigerian economy. Hence, the insurance activities hosted by the financial sector were seen to be observing the demand following hypotheses from the real sector. The study recommends insurance companies to tailor its products in the emerging markets to reduce thresholds and initiate robust regulatory frameworks, as well as enforcement willingness.
Keywords: Insurance investment, economic growth, pairwise granger causality, demand following function, Nigeria