INSURANCE FIRMS BUSINESS ON FOREIGN DIRECT INVESTMENT IN NIGERIA
Keywords:
premium, claims payment, foreign direct investment, insurance firmsAbstract
This study used an ex-post facto research strategy to look at how insurance companies' actions affected foreign direct investment in Nigeria from 1990–2022. Insurance company premiums, claims payments, and total investment in the insurance industry are some of the indicators used to measure foreign direct investment inflows. A number of secondary sources were used for the analysis, including the National Bureau of Statistics (NBS), the CBN statistical bulletin, and the yearly reports and statistics of NAICOM. This study used the Vector Error Correction Model (VECM) to find that foreign direct investment (FDI) flows into the insurance industry, and that insurance company premiums have a positive effect on FDI, which is a reflection of the risk management function of insurance in luring steady investments. On the flip side, foreign direct investment (FDI) flows are negatively affected by increased claims payments, demonstrating how risk perception influences investment choices. An error correction term suggests that the system is adjusting towards equilibrium over time, and the relationship between total insurance investment and FDI seems to be marginally significant. Policy actions that aim to promote economic growth and stability can be informed by these findings, which add to our understanding of how the dynamics of the insurance sector impact flows of foreign investment. Improving risk management services, establishing regulations for claims payments to increase transparency and efficiency, and encouraging investment stability to boost investor confidence and bring in more foreign direct investment are all suggestions
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