Developing an Empirical Framework for Macroeconomic Determinants of Insurance Companies’ Stock Performance in Nigeria.
In this study, the researchers examined the macroeconomic determinants of the stock’s price performance of insurance companies in Nigeria. Specifically, the study examined the relationship between interest rate spread, exchange rate, and inflation on the stock price of insurance companies listed in the Nigerian Stock Exchange and equally sought to establish an empirical model of the relationship between the variables of interest in the study. Longitudinal research design was adopted for the study as panel data from the Nigerian Stock Exchange (NSE) fact book and Central Bank of Nigeria annual statistical bulletin for the period 1990-2021 was used in the study. Panel data regression model was used in data analysis. The result from the analysis revealed a significant negative relationship between interest rate spread and stock price of insurance companies, a significant positive relationship between exchange rate and stock price of insurance companies, and a significant negative relationship between inflation and the stock price of insurance companies. Furthermore, results from the analysis indicated a long-run relationship between the macroeconomic variables and stock price of insurance companies which is captured by a random effect model. Based on the findings, ensuring relative stability of macroeconomic determinants which will enhance the predictability of stock prices of insurance companies in Nigeria was recommended.
Keywords: Interest rate spread, Exchange rate, Inflation, Insurance stocks, Nigeria
