Effect of Pension and Insurance Funds on Financial Deepening in Nigeria

Abstract

This study examines the effect of pension and insurance funds on financial deepening in Nigeria for the period 2012Q1 to 2023Q1. Quarterly time series data for pension funds, insurance funds and financial deepening were collected from the Central Bank of Nigeria statistical bulletin. Philip Perron test was used to test the stationarity of the data and the ARDL Bound cointegration test was utilized to determine the presence of long-run relationship. The Fully Modified Ordinary Least Squares regression method was used to test the effect of pension and insurance funds on financial deepening in Nigeria. The findings showed that there was no long-run relationship among the variables, while pension funds have a significant effect on financial deepening in Nigeria, insurance funds do not have a significant effect on financial deepening in Nigeria. It was recommended that, in other to increase the financial depth of the Nigerian economy, a critical upward review of the investment outlet available to pension fund administrators should be done. On the other hand, the Central Bank of Nigeria in collaboration with the National Insurance Commission can take advantage of opportunities in the insurance industry, especially by enforcing all the mandatory insurance policies given by law.