Impact of Financial Factors on Financial Performance Evidence from Insurance Companies in Ethiopia

Habtamu Alebachew Legass; Misgan Mulatie; Anwar Adem Shikur; Tilahun Shewangizaw Kura

doi:doi:10.11648/j.ijfbr.20210706.13

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Impact of Financial Factors on Financial Performance Evidence from Insurance Companies in Ethiopia

Habtamu Alebachew Legass, Misgan Mulatie, Anwar Adem Shikur, Tilahun Shewangizaw Kura

Published in International Journal of Finance and Banking Research (Volume 7, Issue 6)

Received: 25 November 2021 Accepted: 14 December 2021 Published: 24 December 2021

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Abstract

The main purpose of the study was to assess the influence of financial factors on the financial performance of 11 insurance businesses in Ethiopia that were deliberately selected. The researcher employed an explanatory research design with a quantitative research approach using panel data in this study. Secondary data was acquired from Ethiopia's national bank for this investigation. In terms of sampling, the researcher employed a purposive sampling strategy based on the availability of data, the year of establishment, and the insurances' operational life. Finally, using the EView10 software suite, the data was evaluated. As a result, the regression was done using a random effect regression model. The results of random effect regression analysis revealed that liquidity ratio, premium growth, and gross domestic product have positive and statistically significant effects on Ethiopian insurance companies' financial performance, while other variables such as leverage, underwriting risk, and inflation rate have negative and statistically significant effects. Finally, the researcher advised Ethiopian insurance company executives to prepare for macroeconomic changes by developing financial plans, developing new product lines, and conducting extensive advertising to increase their market share, and to place a greater emphasis on factors that increase premium and liquidity ratios, as well as factors that reduce leverage and underwriting risk, in order to improve their operational and financial performance.

Published in	International Journal of Finance and Banking Research (Volume 7, Issue 6)
DOI	10.11648/j.ijfbr.20210706.13
Page(s)	155-163
Creative Commons	This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.
Copyright	Copyright © The Author(s), 2021. Published by Science Publishing Group

Keywords

Financial Factors, Financial Performance, Insurance Company

References

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APA Style

Habtamu Alebachew Legass, Misgan Mulatie, Anwar Adem Shikur, Tilahun Shewangizaw Kura. (2021). Impact of Financial Factors on Financial Performance Evidence from Insurance Companies in Ethiopia. International Journal of Finance and Banking Research, 7(6), 155-163. https://doi.org/10.11648/j.ijfbr.20210706.13

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ACS Style

Habtamu Alebachew Legass; Misgan Mulatie; Anwar Adem Shikur; Tilahun Shewangizaw Kura. Impact of Financial Factors on Financial Performance Evidence from Insurance Companies in Ethiopia. Int. J. Finance Bank. Res. 2021, 7(6), 155-163. doi: 10.11648/j.ijfbr.20210706.13

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AMA Style

Habtamu Alebachew Legass, Misgan Mulatie, Anwar Adem Shikur, Tilahun Shewangizaw Kura. Impact of Financial Factors on Financial Performance Evidence from Insurance Companies in Ethiopia. Int J Finance Bank Res. 2021;7(6):155-163. doi: 10.11648/j.ijfbr.20210706.13

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@article{10.11648/j.ijfbr.20210706.13,
  author = {Habtamu Alebachew Legass and Misgan Mulatie and Anwar Adem Shikur and Tilahun Shewangizaw Kura},
  title = {Impact of Financial Factors on Financial Performance Evidence from Insurance Companies in Ethiopia},
  journal = {International Journal of Finance and Banking Research},
  volume = {7},
  number = {6},
  pages = {155-163},
  doi = {10.11648/j.ijfbr.20210706.13},
  url = {https://doi.org/10.11648/j.ijfbr.20210706.13},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ijfbr.20210706.13},
  abstract = {The main purpose of the study was to assess the influence of financial factors on the financial performance of 11 insurance businesses in Ethiopia that were deliberately selected. The researcher employed an explanatory research design with a quantitative research approach using panel data in this study. Secondary data was acquired from Ethiopia's national bank for this investigation. In terms of sampling, the researcher employed a purposive sampling strategy based on the availability of data, the year of establishment, and the insurances' operational life. Finally, using the EView10 software suite, the data was evaluated. As a result, the regression was done using a random effect regression model. The results of random effect regression analysis revealed that liquidity ratio, premium growth, and gross domestic product have positive and statistically significant effects on Ethiopian insurance companies' financial performance, while other variables such as leverage, underwriting risk, and inflation rate have negative and statistically significant effects. Finally, the researcher advised Ethiopian insurance company executives to prepare for macroeconomic changes by developing financial plans, developing new product lines, and conducting extensive advertising to increase their market share, and to place a greater emphasis on factors that increase premium and liquidity ratios, as well as factors that reduce leverage and underwriting risk, in order to improve their operational and financial performance.},
 year = {2021}
}

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TY  - JOUR
T1  - Impact of Financial Factors on Financial Performance Evidence from Insurance Companies in Ethiopia
AU  - Habtamu Alebachew Legass
AU  - Misgan Mulatie
AU  - Anwar Adem Shikur
AU  - Tilahun Shewangizaw Kura
Y1  - 2021/12/24
PY  - 2021
N1  - https://doi.org/10.11648/j.ijfbr.20210706.13
DO  - 10.11648/j.ijfbr.20210706.13
T2  - International Journal of Finance and Banking Research
JF  - International Journal of Finance and Banking Research
JO  - International Journal of Finance and Banking Research
SP  - 155
EP  - 163
PB  - Science Publishing Group
SN  - 2472-2278
UR  - https://doi.org/10.11648/j.ijfbr.20210706.13
AB  - The main purpose of the study was to assess the influence of financial factors on the financial performance of 11 insurance businesses in Ethiopia that were deliberately selected. The researcher employed an explanatory research design with a quantitative research approach using panel data in this study. Secondary data was acquired from Ethiopia's national bank for this investigation. In terms of sampling, the researcher employed a purposive sampling strategy based on the availability of data, the year of establishment, and the insurances' operational life. Finally, using the EView10 software suite, the data was evaluated. As a result, the regression was done using a random effect regression model. The results of random effect regression analysis revealed that liquidity ratio, premium growth, and gross domestic product have positive and statistically significant effects on Ethiopian insurance companies' financial performance, while other variables such as leverage, underwriting risk, and inflation rate have negative and statistically significant effects. Finally, the researcher advised Ethiopian insurance company executives to prepare for macroeconomic changes by developing financial plans, developing new product lines, and conducting extensive advertising to increase their market share, and to place a greater emphasis on factors that increase premium and liquidity ratios, as well as factors that reduce leverage and underwriting risk, in order to improve their operational and financial performance.
VL  - 7
IS  - 6
ER  -

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Author Information

Habtamu Alebachew Legass

Department of Accounting and Finance, Dire Dawa University, Dire Dawa, Ethiopia
Misgan Mulatie

Department of Accounting and Finance, Dire Dawa University, Dire Dawa, Ethiopia
Anwar Adem Shikur

Department of Accounting and Finance, Dire Dawa University, Dire Dawa, Ethiopia
Tilahun Shewangizaw Kura

Department of Accounting and Finance, Dire Dawa University, Dire Dawa, Ethiopia

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APA Style

Habtamu Alebachew Legass, Misgan Mulatie, Anwar Adem Shikur, Tilahun Shewangizaw Kura. (2021). Impact of Financial Factors on Financial Performance Evidence from Insurance Companies in Ethiopia. International Journal of Finance and Banking Research, 7(6), 155-163. https://doi.org/10.11648/j.ijfbr.20210706.13

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ACS Style

Habtamu Alebachew Legass; Misgan Mulatie; Anwar Adem Shikur; Tilahun Shewangizaw Kura. Impact of Financial Factors on Financial Performance Evidence from Insurance Companies in Ethiopia. Int. J. Finance Bank. Res. 2021, 7(6), 155-163. doi: 10.11648/j.ijfbr.20210706.13

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AMA Style

Habtamu Alebachew Legass, Misgan Mulatie, Anwar Adem Shikur, Tilahun Shewangizaw Kura. Impact of Financial Factors on Financial Performance Evidence from Insurance Companies in Ethiopia. Int J Finance Bank Res. 2021;7(6):155-163. doi: 10.11648/j.ijfbr.20210706.13

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@article{10.11648/j.ijfbr.20210706.13,
  author = {Habtamu Alebachew Legass and Misgan Mulatie and Anwar Adem Shikur and Tilahun Shewangizaw Kura},
  title = {Impact of Financial Factors on Financial Performance Evidence from Insurance Companies in Ethiopia},
  journal = {International Journal of Finance and Banking Research},
  volume = {7},
  number = {6},
  pages = {155-163},
  doi = {10.11648/j.ijfbr.20210706.13},
  url = {https://doi.org/10.11648/j.ijfbr.20210706.13},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ijfbr.20210706.13},
  abstract = {The main purpose of the study was to assess the influence of financial factors on the financial performance of 11 insurance businesses in Ethiopia that were deliberately selected. The researcher employed an explanatory research design with a quantitative research approach using panel data in this study. Secondary data was acquired from Ethiopia's national bank for this investigation. In terms of sampling, the researcher employed a purposive sampling strategy based on the availability of data, the year of establishment, and the insurances' operational life. Finally, using the EView10 software suite, the data was evaluated. As a result, the regression was done using a random effect regression model. The results of random effect regression analysis revealed that liquidity ratio, premium growth, and gross domestic product have positive and statistically significant effects on Ethiopian insurance companies' financial performance, while other variables such as leverage, underwriting risk, and inflation rate have negative and statistically significant effects. Finally, the researcher advised Ethiopian insurance company executives to prepare for macroeconomic changes by developing financial plans, developing new product lines, and conducting extensive advertising to increase their market share, and to place a greater emphasis on factors that increase premium and liquidity ratios, as well as factors that reduce leverage and underwriting risk, in order to improve their operational and financial performance.},
 year = {2021}
}

Copy | Download

TY  - JOUR
T1  - Impact of Financial Factors on Financial Performance Evidence from Insurance Companies in Ethiopia
AU  - Habtamu Alebachew Legass
AU  - Misgan Mulatie
AU  - Anwar Adem Shikur
AU  - Tilahun Shewangizaw Kura
Y1  - 2021/12/24
PY  - 2021
N1  - https://doi.org/10.11648/j.ijfbr.20210706.13
DO  - 10.11648/j.ijfbr.20210706.13
T2  - International Journal of Finance and Banking Research
JF  - International Journal of Finance and Banking Research
JO  - International Journal of Finance and Banking Research
SP  - 155
EP  - 163
PB  - Science Publishing Group
SN  - 2472-2278
UR  - https://doi.org/10.11648/j.ijfbr.20210706.13
AB  - The main purpose of the study was to assess the influence of financial factors on the financial performance of 11 insurance businesses in Ethiopia that were deliberately selected. The researcher employed an explanatory research design with a quantitative research approach using panel data in this study. Secondary data was acquired from Ethiopia's national bank for this investigation. In terms of sampling, the researcher employed a purposive sampling strategy based on the availability of data, the year of establishment, and the insurances' operational life. Finally, using the EView10 software suite, the data was evaluated. As a result, the regression was done using a random effect regression model. The results of random effect regression analysis revealed that liquidity ratio, premium growth, and gross domestic product have positive and statistically significant effects on Ethiopian insurance companies' financial performance, while other variables such as leverage, underwriting risk, and inflation rate have negative and statistically significant effects. Finally, the researcher advised Ethiopian insurance company executives to prepare for macroeconomic changes by developing financial plans, developing new product lines, and conducting extensive advertising to increase their market share, and to place a greater emphasis on factors that increase premium and liquidity ratios, as well as factors that reduce leverage and underwriting risk, in order to improve their operational and financial performance.
VL  - 7
IS  - 6
ER  -

Copy | Download