Impact of Insurance Companies Investment on Bank Liquidity and Economic Growth of Nigeria

Oru Anthony Odu; Ubana Ubi Iwara; Eja-Osang Joseph

doi:doi:10.11648/j.ijfbr.20220801.13

| Peer-Reviewed

Impact of Insurance Companies Investment on Bank Liquidity and Economic Growth of Nigeria

Oru Anthony Odu, Ubana Ubi Iwara, Eja-Osang Joseph

Published in International Journal of Finance and Banking Research (Volume 8, Issue 1)

Received: 11 December 2021 Accepted: 6 January 2022 Published: 26 January 2022

Views: Downloads:

Download PDF

Share This Article

Twitter
Linked In
Facebook

Abstract

The study examined the impact of insurance companies’ investment on bank liquidity and economic growth of Nigeria. This is basically to determine the extent of insurance companies contribution to liquidity formation in the banking sector which has being the major cause of bank failures as a financial intermediary and a dealer in short-term securities thereby mobilizing resources for real economic sector. The population of the study is made up of the fifty-nine Nigeria (59) insurance companies in Nigeria. Time series data from the central bank statistical bulletin on total insurance business investment was the source for secondary data. The study employed both inferential and Descriptive Statistics. The E-view statistical package was used for data analysis and test for three (3) hypotheses. The study reveals that there is no significant relationship between short-term investments of insurance companies and banks liquidity, that there exist no significant relationship between short term investment of insurance companies and liquidity formation of the Nigerian money market. The study also reveals that there exist a positive but not significant relation between insurance premium and Gross Domestic product in Nigeria. The study concludes that insurance companies in Nigeria do not impact significantly on the liquidity of banks, money market and economic growth in Nigeria. The study recommends that insurance companies be recapitalized to afford them more resources to expand their investment portfolios to stimulate liquidity formation. That the insurance companies should be more innovative and provide more services to courte public attention and participation to close the insurance gap. The National Insurance Commission (NAICOM) should also ensure compliance and adherence to regulations in the industry.

Published in	International Journal of Finance and Banking Research (Volume 8, Issue 1)
DOI	10.11648/j.ijfbr.20220801.13
Page(s)	14-24
Creative Commons	This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.
Copyright	Copyright © The Author(s), 2024. Published by Science Publishing Group

Keywords

Liquidity Formation, Short-term Investments, Money Market Value, Insurance Premium

References

[1]	Adejumo, A. (2013). The challenges of market discipline and unhealthy practices. Journal of insurance law and practice. October – December 2013 Vol. 4. No. 4, ISSBN 2276-9455.
[2]	Akpan, I. T. and Joseph, E. M. (2017). Comparative Analysis of Insurance Companies and Commercial Banks’ Investment Portfolios and Economic Growth in Nigeria. Arabian Journal of Business and Management Review (Nigeria chapter) vol. 4 No: 2 pp. 6-25.
[3]	Baju, S. B. (2004). Growing New Insurance Products in Nigeria. CSS Bookshop Limited, Lagos-Nigeria.
[4]	Dragos, Smona-Laura (2013). Regulatory Framework in the Insurance Industry- The Solvency II Project. International Journal of Academic Research in Business and Social Sciences. Vol. 3 No. 5. ISSN: 2222-6990.
[5]	Egerue, P. E. (2017). Basic Insurance for Schools and Colleges. Lagos: Mbeyi and Associates (Nig.) Limited.
[6]	Etale, L. M. and Edoumiekumo, A. R. (2020). Financial Sector Policies and Economic Growth: Evidence from Insurance Sector in Nigeria. International Journal of Academic Research in Business and Social Sciences. Online article: http: halx.dox.org/10.6007/IJARBSS/vol.19/7718.
[7]	Falegan, J. I. (1991). Insurance: An Introductory Text.
[8]	Fashagba, M. O. (2018). The impact of insurance on economic growth in Nigeria. Researchgate.
[9]	Harrington and Nichaus (2003). Risk Management and Insurance. 2^nd Edition, Boston: McGraw Hill International Edition.
[10]	Ikechukwu, N. C. N. and Chilindu, A. A. (2016): The Role of Non-Bank Financial Institutions on Financial Intermediation Process in Nigeria. 1992-2014.
[11]	Isimoya, O. A. (1999). Fundamentals of Insurance. Management Publishing Limited, Akola-Lagos.
[12]	Iyodo, B. Y., Samuel, S. E., and Iyada, S. J. (2018). Effect of Insurance Industry Performance on Economic Growth in Nigeria. International Journal of Business and Finance Management Research. ISSN: 2053-1842 www.bluejournals.org/ijbfmr.
[13]	Mishra, M. N. and Mishua, S. B. (1979). Insurance Principles and Practice. S. Chand and Company Limited. Ram Vagar, New Delhi – 110055.
[14]	M. L. Jhingan (2011): Monetary Economics, Delhi, Nisha Enterprises.
[15]	Oru A. O and Odumusor (2019), Impact of Treasury Single Account on Banks Liquidity and Effective Control of Government Cash resources. International Journal of Economics and Finance (IOSR) Vol. 10 (1) February, pp: 49-59.
[16]	Orumba Chijoke Victor (2013). Impact of Insurance on Economic Growth in Nigeria. International Journal of Business and Management Invention ISSN (online) 2319-8028, ISSN (print) 2319-8017 www.ijbmi.org vol. 2 Issue 10 October.
[17]	Oru, Ubana and Okwajie (2021). Impact of discount house operations on bank liquidity and liquidity management in Nigeria. International Journal of Economics and Finance (IOSR) Vol. 12 (4) August. pp 57-66.
[18]	Pandey, I. M (2015). Financial management. Eleventh edition. India. Vika publishing house pvt ltd.
[19]	Rejda, G. E. (2008). Principles of Risk Management and Insurance. Boston: International Edition. (MA 02116).
[20]	Yerokun, Olusegun (2001). Insurance law in Nigeria. Nigeria Revenue Project Publications. C/O Lagos State University, Ojo-Lagos, Nigeria.
[21]	Nwankwo, G. O (1980). The Nigerian Financial system. London: Macmillian publishers.
[22]	Gbede, G. O (2003). Marketing Insurance services. Lagos: Westborne Business school.
[23]	Rossi L. (2016): How to manage Liquidity; head Liquidity and Investment Product Development, Deutsche Bank. Retrieved from internet, 20^th September, 2016.
[24]	CBN (2007). Nigeria’s financial system strategy 2020 plan. FSS2020 international conference, Abuja. June. pp. 1-45.

Cite This Article

Plain Text BibTeX RIS

APA Style

Oru Anthony Odu, Ubana Ubi Iwara, Eja-Osang Joseph. (2022). Impact of Insurance Companies Investment on Bank Liquidity and Economic Growth of Nigeria. International Journal of Finance and Banking Research, 8(1), 14-24. https://doi.org/10.11648/j.ijfbr.20220801.13

Copy | Download

ACS Style

Oru Anthony Odu; Ubana Ubi Iwara; Eja-Osang Joseph. Impact of Insurance Companies Investment on Bank Liquidity and Economic Growth of Nigeria. Int. J. Finance Bank. Res. 2022, 8(1), 14-24. doi: 10.11648/j.ijfbr.20220801.13

Copy | Download

AMA Style

Oru Anthony Odu, Ubana Ubi Iwara, Eja-Osang Joseph. Impact of Insurance Companies Investment on Bank Liquidity and Economic Growth of Nigeria. Int J Finance Bank Res. 2022;8(1):14-24. doi: 10.11648/j.ijfbr.20220801.13

Copy | Download

@article{10.11648/j.ijfbr.20220801.13,
  author = {Oru Anthony Odu and Ubana Ubi Iwara and Eja-Osang Joseph},
  title = {Impact of Insurance Companies Investment on Bank Liquidity and Economic Growth of Nigeria},
  journal = {International Journal of Finance and Banking Research},
  volume = {8},
  number = {1},
  pages = {14-24},
  doi = {10.11648/j.ijfbr.20220801.13},
  url = {https://doi.org/10.11648/j.ijfbr.20220801.13},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ijfbr.20220801.13},
  abstract = {The study examined the impact of insurance companies’ investment on bank liquidity and economic growth of Nigeria. This is basically to determine the extent of insurance companies contribution to liquidity formation in the banking sector which has being the major cause of bank failures as a financial intermediary and a dealer in short-term securities thereby mobilizing resources for real economic sector. The population of the study is made up of the fifty-nine Nigeria (59) insurance companies in Nigeria. Time series data from the central bank statistical bulletin on total insurance business investment was the source for secondary data. The study employed both inferential and Descriptive Statistics. The E-view statistical package was used for data analysis and test for three (3) hypotheses. The study reveals that there is no significant relationship between short-term investments of insurance companies and banks liquidity, that there exist no significant relationship between short term investment of insurance companies and liquidity formation of the Nigerian money market. The study also reveals that there exist a positive but not significant relation between insurance premium and Gross Domestic product in Nigeria. The study concludes that insurance companies in Nigeria do not impact significantly on the liquidity of banks, money market and economic growth in Nigeria. The study recommends that insurance companies be recapitalized to afford them more resources to expand their investment portfolios to stimulate liquidity formation. That the insurance companies should be more innovative and provide more services to courte public attention and participation to close the insurance gap. The National Insurance Commission (NAICOM) should also ensure compliance and adherence to regulations in the industry.},
 year = {2022}
}

Copy | Download

TY  - JOUR
T1  - Impact of Insurance Companies Investment on Bank Liquidity and Economic Growth of Nigeria
AU  - Oru Anthony Odu
AU  - Ubana Ubi Iwara
AU  - Eja-Osang Joseph
Y1  - 2022/01/26
PY  - 2022
N1  - https://doi.org/10.11648/j.ijfbr.20220801.13
DO  - 10.11648/j.ijfbr.20220801.13
T2  - International Journal of Finance and Banking Research
JF  - International Journal of Finance and Banking Research
JO  - International Journal of Finance and Banking Research
SP  - 14
EP  - 24
PB  - Science Publishing Group
SN  - 2472-2278
UR  - https://doi.org/10.11648/j.ijfbr.20220801.13
AB  - The study examined the impact of insurance companies’ investment on bank liquidity and economic growth of Nigeria. This is basically to determine the extent of insurance companies contribution to liquidity formation in the banking sector which has being the major cause of bank failures as a financial intermediary and a dealer in short-term securities thereby mobilizing resources for real economic sector. The population of the study is made up of the fifty-nine Nigeria (59) insurance companies in Nigeria. Time series data from the central bank statistical bulletin on total insurance business investment was the source for secondary data. The study employed both inferential and Descriptive Statistics. The E-view statistical package was used for data analysis and test for three (3) hypotheses. The study reveals that there is no significant relationship between short-term investments of insurance companies and banks liquidity, that there exist no significant relationship between short term investment of insurance companies and liquidity formation of the Nigerian money market. The study also reveals that there exist a positive but not significant relation between insurance premium and Gross Domestic product in Nigeria. The study concludes that insurance companies in Nigeria do not impact significantly on the liquidity of banks, money market and economic growth in Nigeria. The study recommends that insurance companies be recapitalized to afford them more resources to expand their investment portfolios to stimulate liquidity formation. That the insurance companies should be more innovative and provide more services to courte public attention and participation to close the insurance gap. The National Insurance Commission (NAICOM) should also ensure compliance and adherence to regulations in the industry.
VL  - 8
IS  - 1
ER  -

Copy | Download

Author Information

Oru Anthony Odu

Department of Accountancy, Cross River University of Technology, Calabar, Nigeria
Ubana Ubi Iwara

Department of Accountancy, Cross River University of Technology, Calabar, Nigeria
Eja-Osang Joseph

Department of Accountancy, Cross River University of Technology, Calabar, Nigeria

Download PDF

Sections

Plain Text BibTeX RIS

APA Style

Oru Anthony Odu, Ubana Ubi Iwara, Eja-Osang Joseph. (2022). Impact of Insurance Companies Investment on Bank Liquidity and Economic Growth of Nigeria. International Journal of Finance and Banking Research, 8(1), 14-24. https://doi.org/10.11648/j.ijfbr.20220801.13

Copy | Download

ACS Style

Oru Anthony Odu; Ubana Ubi Iwara; Eja-Osang Joseph. Impact of Insurance Companies Investment on Bank Liquidity and Economic Growth of Nigeria. Int. J. Finance Bank. Res. 2022, 8(1), 14-24. doi: 10.11648/j.ijfbr.20220801.13

Copy | Download

AMA Style

Oru Anthony Odu, Ubana Ubi Iwara, Eja-Osang Joseph. Impact of Insurance Companies Investment on Bank Liquidity and Economic Growth of Nigeria. Int J Finance Bank Res. 2022;8(1):14-24. doi: 10.11648/j.ijfbr.20220801.13

Copy | Download

@article{10.11648/j.ijfbr.20220801.13,
  author = {Oru Anthony Odu and Ubana Ubi Iwara and Eja-Osang Joseph},
  title = {Impact of Insurance Companies Investment on Bank Liquidity and Economic Growth of Nigeria},
  journal = {International Journal of Finance and Banking Research},
  volume = {8},
  number = {1},
  pages = {14-24},
  doi = {10.11648/j.ijfbr.20220801.13},
  url = {https://doi.org/10.11648/j.ijfbr.20220801.13},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ijfbr.20220801.13},
  abstract = {The study examined the impact of insurance companies’ investment on bank liquidity and economic growth of Nigeria. This is basically to determine the extent of insurance companies contribution to liquidity formation in the banking sector which has being the major cause of bank failures as a financial intermediary and a dealer in short-term securities thereby mobilizing resources for real economic sector. The population of the study is made up of the fifty-nine Nigeria (59) insurance companies in Nigeria. Time series data from the central bank statistical bulletin on total insurance business investment was the source for secondary data. The study employed both inferential and Descriptive Statistics. The E-view statistical package was used for data analysis and test for three (3) hypotheses. The study reveals that there is no significant relationship between short-term investments of insurance companies and banks liquidity, that there exist no significant relationship between short term investment of insurance companies and liquidity formation of the Nigerian money market. The study also reveals that there exist a positive but not significant relation between insurance premium and Gross Domestic product in Nigeria. The study concludes that insurance companies in Nigeria do not impact significantly on the liquidity of banks, money market and economic growth in Nigeria. The study recommends that insurance companies be recapitalized to afford them more resources to expand their investment portfolios to stimulate liquidity formation. That the insurance companies should be more innovative and provide more services to courte public attention and participation to close the insurance gap. The National Insurance Commission (NAICOM) should also ensure compliance and adherence to regulations in the industry.},
 year = {2022}
}

Copy | Download

TY  - JOUR
T1  - Impact of Insurance Companies Investment on Bank Liquidity and Economic Growth of Nigeria
AU  - Oru Anthony Odu
AU  - Ubana Ubi Iwara
AU  - Eja-Osang Joseph
Y1  - 2022/01/26
PY  - 2022
N1  - https://doi.org/10.11648/j.ijfbr.20220801.13
DO  - 10.11648/j.ijfbr.20220801.13
T2  - International Journal of Finance and Banking Research
JF  - International Journal of Finance and Banking Research
JO  - International Journal of Finance and Banking Research
SP  - 14
EP  - 24
PB  - Science Publishing Group
SN  - 2472-2278
UR  - https://doi.org/10.11648/j.ijfbr.20220801.13
AB  - The study examined the impact of insurance companies’ investment on bank liquidity and economic growth of Nigeria. This is basically to determine the extent of insurance companies contribution to liquidity formation in the banking sector which has being the major cause of bank failures as a financial intermediary and a dealer in short-term securities thereby mobilizing resources for real economic sector. The population of the study is made up of the fifty-nine Nigeria (59) insurance companies in Nigeria. Time series data from the central bank statistical bulletin on total insurance business investment was the source for secondary data. The study employed both inferential and Descriptive Statistics. The E-view statistical package was used for data analysis and test for three (3) hypotheses. The study reveals that there is no significant relationship between short-term investments of insurance companies and banks liquidity, that there exist no significant relationship between short term investment of insurance companies and liquidity formation of the Nigerian money market. The study also reveals that there exist a positive but not significant relation between insurance premium and Gross Domestic product in Nigeria. The study concludes that insurance companies in Nigeria do not impact significantly on the liquidity of banks, money market and economic growth in Nigeria. The study recommends that insurance companies be recapitalized to afford them more resources to expand their investment portfolios to stimulate liquidity formation. That the insurance companies should be more innovative and provide more services to courte public attention and participation to close the insurance gap. The National Insurance Commission (NAICOM) should also ensure compliance and adherence to regulations in the industry.
VL  - 8
IS  - 1
ER  -

Copy | Download