Insurance Penetration and Financial Development in Nigeria, 2003-2023

This study investigates the interaction between insurance penetration on the development of the financial system in Nigeria covering the period 2003 to 2023. The main purpose of the paper is to find out the responsiveness of the insurance penetration to the development of the financial system in Nigeria. Financial development broken down into bank development (Credit to the Private Sector divided by Gross Domestic Product) and institutional development (money supply divided by Gross Domestic Product) served as the independent variables while insurance penetration served as the dependent variable. An array of preestimation tests were used to determine the goodness of the used dataset and the adopted methodology is the Autoregressive Distributed Lag Model form of regression analyses. Findings arising from this study indicate that financial development enhances insurance penetration while the regulatory environment controlled for by monetary policy rate also favourably affects insurance penetration. This implies that the interconnectedness of the sectors of the financial system should be explored for the imperatives of overall developemnt of the financial system.