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ABSTRACT
The aim of this study was to empirically ascertain the linkage between stock market performance and insurance sector development in Nigeria. The study covered the period spanning 1981 to 2022, using annual dataset extracted from the Central Bank of Nigeria Annual Statistical Bulletin. The dependent variable was Insurance Sector Development (proxied by Insurance Penetration rate), while the explanatory variables include All share index, Total Annual Market Capitalization on The Nigerian Stock Exchange, Market turnover, and Value of transactions. Also, the method of analysis adopted in accomplishing the specific objectives of this study was the Dynamics Ordinary Least Squares (DOLS) approach. From the Dynamics Ordinary Least Squares (DOLS) results, the coefficient representing the impact of market capitalization on insurance sector development in Nigeria was positive and statistically significant at 1% level, while the coefficient representing the impact of all-share index on insurance sector development in Nigeria was negative and statistically significant at 1% level. Similarly, the coefficient representing the impact of total value of transactions on insurance sector development in Nigeria was negative and statistically insignificant even at 10% level, while the coefficient representing the impact of market turnover on insurance sector development in Nigeria was negative and statistically significant at 1% level. Arising from the study’s key empirical findings, this research thus recommended that policymakers, portfolio managers, and regulatory institutions provide sufficient precautions that mitigate the unfounded effect caused by adverse shocks emanating in the Nigerian stock market, particularly in the area of rapid and adequate information transmission to both risk taking and risk-averse stakeholders in the stock markets for proper investment decisions, as this will help boost the country's insurance sector's development.
