Financial System Broadening and Insurance Business Performance in Nigeria, 1996-2019 ARDL Co-integration Model Approach

A considerable amount of scholarly works have examined the link between financial system broadening and economic performance using varieties of econometric models. Although, most of these studies have concentrated attention on the economic performance, none of the studies had examined a co-integrating relationship between financial system broadening and insurance performance in Nigeria. Some efforts have been made on the nexus between financial system broadening and economic performance, though not comprehensive enough to model this nexus. This has created gap in the literature which needs to be filled. It is in view of this that this study examines the cointegration relationship that existed between financial system broadening and insurance in Nigeria. Financial system broadening was represented by banking system services such as extended money supply services and extent of private sector credits while insurance performance is represented with insurance profitability. The time series data was collected from the Central Bank of Nigeria Statistical Bulletins. Multiple classical linear regression analysis was used in this analysis. Special cointegration relationship using auto regressive distributed lag was used in the analysis through eviews 10.0. The findings reveal that financial system broadening via aggregate money supply and private sector credits had a long run relationship with insurance performance in Nigeria. The study has contributed to the economic performance literature with a better understanding of the role of financial system deepening and its association with insurance performance which spurns economic growth. This study provides valuable knowledge to policy makers and economic managers, to refine their current policies and subsequently improve financial system broadening and economic performance through insurance based polices.