Exchange Rate Misalignment and Insurance Industry Performance in Nigeria

  • Ibidapo L. Owoeye Department of Economics, University of Lagos, Lagos
  • Margaret A. Loto Department of Economics, University of Lagos, Lagos
Keywords: Insurance industry, Exchange rate Misalignment


The study examines the impact of the Exchange Rate Misalignment on Insurance Industry in Nigeria. A sample of 28 firms is used for the period 2007-2018 comprising 336 annual observations. To achieve the objective of the study, the research utilises secondary data from the financial audited accounts of insurance firms obtained from the Nigerian Stock Exchange (NSE). The dependent variable is captured using deviation from the average equilibrium exchange rate and insurance industry performance is measured using investment income. A static panel is employed for the analysis, the observations from each firm are stacked following by first estimating the pool regression model while fixed effect is employed to remove misspecification. The results reveal that the financial performance of insurance industry is influenced by the misalignment of the Exchange rate.


Adeniran, A. O. & Sodiq, B.O. (2018). Economy Recession and way-out: Nigeria as Case Study. Global journal of human- social science, E Economy, 18(1), 1-6.

Africa Insurance Barometer. (2018). Insurance Market Survey. African Insurance Organisation, No 3/2018.

Alam, A. S. A. F., Begum, H., Masud, M. M., Al-Amin, A. Q., & Filho, W. L. (2020). Agriculture insurance for disaster risk reduction: A case of study of Malaysia. International journal of disaster risk reduction, 47, 101623.

Brophy, R. (2012). Development of insurance regulation in Ireland. Journal of financial regulation compliance, 20(3), 248-263.

Chang, T., Lee, C-C. & Chang, C-H. (2013). Does insurance activity promote economic growth? Further evidence-based on bootstrap panel Granger Causality test. The European journal of finance, 20(12), 1187-1210.

Efayena, O. (2014). Financial intermediaries and economic growth: The Nigerian evidence. Acta Universitatis Danubius. Œconomica, 10(3), 125 – 135.

Flota, C. (2014). The impact of exchange rate movement on firm value in Mexico. American Journal of Economics, 4(2A), 51-72.

Haiss, P. & Sumegi, K. (2008). The relationship between insurance and economic growth in Europe: A theoretical and empirical analysis. Empirica, 35(2008), 405-431. DOI: org/10.1007/s10663-0089072-2

Hossin, M. S., Mondol, M. F. (2020). Impact of Exchange Rate Fluctuations on Financial Performance of State-Owned Commercial Banks in Bangladesh: An Empirical Study. Noble International Journal of Economics and Financial. 5(2020), 92-101

Inyiama, O. I & Ozouli, C. (2014). Interactions between Exchange Rate and Financial Performance Indicators in Nigeria Beer Industry: Evidence from Nigeria Breweries Plc. Academics journal of interdisciplinary studies.

Jubaedah, Y. I. & Hadi, R. A. A. (2016). The influence of financial performance, capital structure, and macroeconomic factors on firm’s value: Evidence from textile companiesat Indonesia Stock Exchange. Journal of applied finance & accounting, 2(2), 18-29.

Lawa, E., Zogli, L.K. J. & Dlamini, B. L. (2017). The determinants of bank performance in South Africa: A Panel Data Analysis, Journal of Economics, 8(2), 94-108. DOI: 10:1080/09765239.2017.1391492.

Lee, M. (2017). The Impact of Exchange Rate on Firm Performance: Evidence from Korean Firms. Emerging Markets Finance and Trade, 53(11), 2440–2449. doi:10.1080/1540496x.2017.1322504.

Li, D., Moshirian, F., Wee, T. & Wu, E. (2009). Foreign exchange exposure: Evidence from the U.S. insurance industry. Journal of International Financial Markets, Institutions, and Money, 19(2), 306–320

Luo, X., Tong, S., Lin, Z. & Zhang, C. (2020). The impact of platform protection insurance on buyers and sellers in the sharing economy: A national experiment. Journal of marketing, DOI: 101177/0022242920962510.

Manyok, A.J. (2016). Effects of exchange rate fluctuations on the financial performance of commercial banks in South Sudan, Thesis, University of Nairobi. Available at: http:/

Mohyuldin, S., Regupathi, A. & Abu-Bakar, A. (2017). Insurance effect on economic growth among economic various phases of development. Review of international business and strategy, 27(4), 501-519.

Moyo, D., and Turgut, T. (2020). Impact of Inflation and Exchange Rate on the Financial Performance of Commercial Banks in South Africa. Journal of Applied Economic Sciences, 15(3): 626-638. (69).11.

Nagahisarchoghaei, M., Nagahi, M & Soleiman, Nadia. (2018). The impact of exchange rate movements on India firm performance. International Journal of Finance and Accounting, 7 (4), 108-121.

Neilegebreal, D. (2016). Macroeconomics and firm-specific determinants of profitability of insurance industry in Ethiopia. Global journal of management and business, 16(7-C). DOI: org/index.php/GJMBR/article/118view/2041.

Rahman, A. M. & Islam, S. (2021). Can voluntary insurance ensure risk-free digital- banking? DOI: org/10.1080/14765284.2021.1929792.

Rottegers, D., Tandon, A. & Keminker, C. (2018). QECD progress update on approaches to mobilizing institutional investment for sustainable infrastructure. Journal of organization for economic co-operation and development, (1-39).

Sahmidt, C. (2018). Insurance in the Digital Age: A review on key implications for the economy and society, The Geneva Association for the study of insurance economics.

Sinha, Y. (2015). The Indian Insurance Industry Challenges and Prospect. DOI: org/10.2139/ssrn.792166.

Tyson, J. E (2015). Life insurance markets in Sub-Saharan African: Capturing the benefit of economic development. Journal oversees Development institution, (2015), 1-47

UIDin, S.M., Abu-Bakar, A. & Regupath, A. (2017). Does insurance promote economic growth: A comparative study of developed, emerging and developing economies, Cogent Economics & Finance, 5(1), DOI: 10.80/23322039.2017.1390029.

Willians, H. T. (2018). An Empirical Investigation of the Impact of Exchange Rate Fluctuations on Performance of Firms in Nigeria. Journal of Business Management and Economics Research, 2(3), 1-10.

World Bank. (2018). Global Financial Development Report 2017/2018: Banker without Border, Washington, DC. World Bank. Doi: 10.1596/978-1-4648-1148-7.