Insurance Culture, Financial Literacy, and the Corruption Rot in Nigeria

Abstract

This paper carries out both exploratory and empirical examinations of life insurance, financial literacy and corruption as probable antidote for economic inclusive challenges in the Nigerian growth project.  A review of Nigeria’s corruption indexes (Ci) ratings give the perception that Nigerians are endemically corrupt, greedy, avaricious, and valueless. Though, highly contestable; this study hypotheses that Ci ‘granger causes’ life insurance penetration (LIP),income inequality (proxied by Gini coefficient), financial literacy (Flt)(proxied by Literacy rate), Regulatory quality (Rqt), and gross domestic product growth rate (Gdpgr). The study finds significantly that Ci actually granger causes Gini, Flt and Gdpgr; also Rqt granger causes Lip. The major findings of the variance decomposition is that the predominant source of fluctuations in  all the ‘economic inclusions’ variables tested is income inequality, absorbing average of 85 percent of each through the short to long run periods.  However, this study could not establish Lip led Ci, in their nexus, as postulated by literature. The study recommends fiscal measures to tackle income inequality, raise the income tax rate of the rich, focusing more on indirect taxes on luxuries, and eliminate all taxes for the poor. Institutional regulatory lapse in the insurance industry should better addressed by appointing tested technocrats.

Key words: Economics of corruption, Financial literacy, Insurance culture