The Causal Relationship Between Insurance and Economic Growth in Nigeria (1986-2010)

PurposeThe Ghanaian insurance industry has been transformed significantly from state-led to a market-driven one over the past decades. The empirical literature on the causal relationship between insurance and economic growth has been mixed, but little study on this has been done in Ghana. This study therefore empirically examines the effect of the growing insurance industry on the economic growth in Ghana.Design/methodology/approachQuantitative research design was deployed in the study. The study used Johansen–Juselius cointegration test and vector error correction model. The study deployed quarterly data from the first quarter of 2006 to the second quarter of 2018 sourced from the World Bank (World Development Indicators), National Insurance Commission, Ghana Statistical Service and Bank of Ghana.FindingsFindings revealed that there is a significant and positive short and long-run relationship between insurance and economic growth in Ghana, bidirectional causality between insurance and economic growth and also a long-run effect of innovations (shocks) in insurance on economic growth.Research limitations/implicationsOne of the limitations of the study is the unavailability of quarterly data of some of the variables.Practical implicationsThe study recommends the development and implementation of policies that promote an increase in coverage and access to insurance products to enhance economic growth.Originality/valueThe study finds a bidirectional causality running from insurance premium to economic growth and from economic growth to insurance which is consistent with the feedback hypothesis in the case of Ghana. Impulse response functions and the variance decompositions revealed that innovation (shock) in the insurance industry has a positive impact on economic growth.

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“…The result is consistent with findings of (Adu et al, 2013;Akinlo, 2013;Akinsola and Odhiambo, 2017).…”

Section: Results Of the Long-run Relationship (Vecm)supporting

confidence: 92%

Insurance and economic growth in Ghana

Osei-Bonsu

Abotsi

Carsamer³

2021

JEAS

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“…This implies that interest rate was able to cause a change in real GDP in Nigeria within the reviewed period. Inconsistent with this study, Akinlo (2013) found a unidirectional causality from interest rate to real GDP in Nigeria from 1986 to 2010. A twoway causality was also confirmed between industrial output and exchange rate and likewise between FDI and interest rates.…”

Section: Pairwise Granger Causality Testscontrasting

confidence: 76%

Impact of industrialisation on economic growth in Nigeria

Ibitoye

Ogunoye

Kleynhans

2022

Journal of Economic and Financial Sciences

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Orientation: The industrial sector contributes to the growth of other sectors of the economy. Despite the number of industries in various sectors of the economy, inclusive economic growth is still not met in Nigeria.Research purpose: This article examines the impact of industrialisation on the growth of Nigeria’s economy.Motivation for the study: There exists a divergence in the results of the existing empirical investigations conducted on Nigeria in comparison with other developing economies.Research approach/design and method: The Johansen co-integration and Granger causality tests are utilised to determine the long-term relationship and causality among variables.Main findings: Industrial output has a significant direct effect and an aggregate effect of 86% on the real gross domestic product (GDP). A unidirectional causal impact of industrial output on real GDP was also established.Practical/managerial implications: Fund managers, international traders, policymakers and designers of business strategies and policies should take note of the dynamics of Nigerian industrialisation. This study recommends that government should encourage more foreign direct investment through the adoption of industrialisation policies such as tax holidays, provision of land for industrial uses to foreign investors and also ensuring that the lending interest rate for the real sector is lowered during low production to stimulate growth in the sector. The government should also increase electricity supply, ensure green industrialisation, encourage renewable energy consumption and control the exchange rate that may stimulate industrialisation and increase growth of the economy.Contribution/value-add: This article contributes to existing economic development literature by filling the gap related to the dynamic effect of industrialisation on the Nigerian economy.

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“…On the contrary, these effects are reciprocal in the short-run causality results. This strand of hypothesis is also confirmed by Beck and Webb (2003), Pan and Su (2012) and Akinlo (2013). 1.…”

Section: Feedback Hypothesissupporting

confidence: 70%

Can insurance ensure economic growth in an emerging economy? Fresh evidence from a non-linear ARDL approach

Tran,

Huynh

2023

JFEP

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Purpose This study aims to explore the nexus between insurance penetration and economic development in Vietnam, one of the fastest-growing economies over the past two decades. Design/methodology/approach This study uses an updated data set of the insurance sector in Vietnam from 1996 to 2020. The autoregressive lagging distribution and cointegrating non-linear autoregressive lagging distribution (NARDL) models are used to explore the nexus between the insurance market development and economic growth. Findings This study confirms the unidirectional causality and positive impacts of insurance market development on economic growth both in the short and long term, supporting the “supply-leading” hypothesis. Nonlife insurance has more significant but slower impacts on contributing to economic development in the long run. From the NARDL approach, this study also discloses the asymmetric relationship between the insurance industry and economic growth. Aggregate and life insurance display short- and long-term asymmetric impacts, whereas nonlife insurance shows long-term asymmetry. Originality/value To the best of the authors’ knowledge, this is the first study to examine the hidden asymmetries of the insurance-growth nexus in Vietnam from non-linear models. Notwithstanding the theoretical contributions to the prior literature, several practical implications are proposed for insurance businesses, policymakers and investors.

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The Causal Relationship Between Insurance and Economic Growth in Nigeria (1986-2010)

Cited by 18 publications

References 19 publications

Insurance and economic growth in Ghana

Insurance and economic growth in Ghana

Impact of industrialisation on economic growth in Nigeria

Can insurance ensure economic growth in an emerging economy? Fresh evidence from a non-linear ARDL approach

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