EFFECT OF INSURANCE RECEIVABLES ON ECONOMIC GROWTH
IN NIGERIA

ALAMBA, Chukwuma Samuel
Department of Business Administration
Michael Okpara University of Agriculture, Umudike, Abia State
alambacs@gmail.com
ENYA, Alphonsus Azubuike
Department of Banking and Finance
Michael Okpara University of Agriculture, Umudike, Abia State
enya_alphonsus@yahoo.com
ABSTRACT
The study examined the impact of insurance receivables on Nigeria’s economic growth. Specifically,
the study examined short-run impact of insurance receivables on economic growth in Nigeria; long-run
effect of insurance receivables on economic growth in Nigeria; and causal relationship between
insurance receivables and economic growth in Nigeria from 1986 –2021. The study used annual time
series data covering the period of 35 years. To ascertain the impact of insurance receivables on
economic growth; the study used gross domestic product as a measure of economic growth; insurance
investment, life premium and non-life premium as independent variables; inflation rate and interest rate
as control variables. The Dickey-Fuller Augmented unit root test, Johansen co-integration test, the
Vector Error Correction Model (VECM) and Granger Causality test were employed in the analysis. The
result of the Johansen co-integration test shows the existence of long-run relationship among variables.
The result of the Vector Error Correction Model shows the existence of short-run and long-run
relationship between the variables as the coefficient of the error term is negative and significant at 5%
level of significance. The result also shows that change in insurance investment, life insurance premium
and non-life insurance premium will result to 25.6%, 30.5% and 21.5% change in economic growth
respectively. The result of the Granger Causality test shows a bi-directional causal relationship between
gross domestic product and insurance investment. Based on the findings, the study concludes that there
exists a long run relationship between insurance receivables and economic growth in Nigeria; and
recommends that policy makers should consider fostering insurance friendly policies and fiscal regimes
that can support the growth of the insurance sector and stimulate economic growth.
Keywords: Economic growth, insurance receivables, life premium, non-life premium,