Fiscal policy and sectorial performance: Emphasis on the Nigeria insurance sector

Abstract

One of the significant measures of economic development is the performance of its individual sectors. The insurance industry being an essential part of the economy’s financial sector with inherent potentials to drive economic expansion deserves government consideration in its fiscal policies. This study aimed at examining the effect of government fiscal policy on the performance of the insurance sector using autoregressive distributive lag (ARDL) model on data from CBN bulletin 2020 and Federal Inland Revenue Service report from 1994 to 2020. The result of the study indicated that total tax revenue has a negative relationship with insurance premium both in the short run and in the long run. While government expenditure has a positive effect on insurance performance in the short run and in the long run. The co-integrating equation also signified that for any movement into disequilibrium is corrected within one period. The study therefore recommend among others that government should utilize its expansionary fiscal policy in a manner that it will create an enabling environment for sectorial development, improve investments and relatively increase the activities of the insurance sector.