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

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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

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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), 2022. Published by Science Publishing Group

Keywords

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

References

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[3]	Baju, S. B. (2004). Growing New Insurance Products in Nigeria. CSS Bookshop Limited, Lagos-Nigeria.
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[7]	Falegan, J. I. (1991). Insurance: An Introductory Text.
[8]	Fashagba, M. O. (2018). The impact of insurance on economic growth in Nigeria. Researchgate.
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[11]	Isimoya, O. A. (1999). Fundamentals of Insurance. Management Publishing Limited, Akola-Lagos.
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[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.
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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

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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

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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

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@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}
}

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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
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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  -

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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

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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

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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

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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  -

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