Research Article

Interest Rates and Stock Returns of Nigerian Quoted Insurance Firms

Mustapha Olanrewaju Aliyu1*, Amina Muhammad Liman2, Shukurat Moronke Bello2, Aisha Aminu2
1 Department of Industrial Relations and Personnel Management, Faculty of Management Sciences, University of Ilorin, Ilorin, Nigeria
2 Department of Business Administration and Entrepreneurship, Bayero University, Kano, Nigeria
* Corresponding author: aliyu.om@unilorin.edu.ng
Published: Nov, 2022
DOI: 10.67894/bbr.2022.73bihqcp
Pages: 30-45
Views: 10
Downloads: 3

Abstract

The study used the Autoregressive Distributed Lag (ARDL) estimation model to establish the short-run and long-run relationship between interest rates and the return on the stock of insurance firms listed in Nigeria. The study adopted ex-post facto research design because it used secondary sources to extract data regarding the exchange rate of the Nigerian naira to the United States dollar, inflation rate and interest rate. The population of interest comprised all Nigerian insurance businesses, publicly traded on the stock exchange between January 2019 and December 2020. As of December 2020, there were 25 insurance firms listed on the Nigerian Stock Exchange, representing the target population for the research. After applying a filter, twelve (12) specified insurance firms were included in the sample size. For data testing, the research used parametric techniques. Using Eviews version 9 software, the model is estimated using Autoregressive Distributed Lag (ARDL) methods. The findings of the longrun and short-run coefficients showed that interest rates affect the return on the stock of insurance firms listed in Nigeria. The exchange rate positively and significantly impacted stock returns over the long and short run. Conversely, inflation and interest rates negatively and significantly long-short-run affect the insurance industry's portfolio returns. As such, Investors should diversify their investment in developing and emerging markets domestically and abroad to reduce the risk associated with the interplay of interest rates.

Keywords

Interest rates; Stock Return; Insurance firms; Nigeria

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How to Cite

Aliyu, M. O., Liman, A. M., Bello, S. M., & Aminu, A. (2022). Interest Rates and Stock Returns of Nigerian Quoted Insurance Firms. Bayero Business Review, 6(2), 30-45. https://doi.org/10.67894/bbr.2022.73bihqcp

M. O. Aliyu, A. M. Liman, S. M. Bello, and A. Aminu, "Interest Rates and Stock Returns of Nigerian Quoted Insurance Firms," Bayero Business Review, vol. 6, no. 2, pp. 30-45, November 2022. doi: 10.67894/bbr.2022.73bihqcp

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