CAPITAL MARKET AND GROWTH OF THE INSURANCE SECTOR IN NIGERIA
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It is expected that an efficient capital market should have significant effect on the insurance sector in any economy because capital market provides the platform for insurance companies to trade in long-term securities. It is shocking that despite all positive indices of the Nigerian capital market, the insurance sector in Nigeria is still underperforming in comparison to their counterparts in other emerging economies, considering the contribution of the sector to the gross domestic product. Thus, the study examines the effect of capital market on the growth of insurance sector in Nigeria. The study employs time series data sourced from National Insurance Commission and Annual Statistical Bulletin of Central Bank of Nigeria from 1986 to 2023. The study uses error correction model to analyze objectives one to three while Toda Yamamoto was used for the analysis of objective four. The result shows that market capitalization, all-share index and volume of transaction have positive effect on the growth of insurance sector in Nigeria. The causality test reveals a bi-directional causal link between capital market and insurance sector’s growth. Based on the discoveries from the study, it is proposed that the Nigerian Capital market should broaden its market size by introducing more innovations with new technologies and models in its trades of bonds, shares and debentures. Also, more insurance companies should be listed in the stock market to improve the volume of transaction, since the activities of the capital market has the tendency to increase the asset base of insurance companies in Nigeria.
JEL Classification Codes: G22, G23.
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