Effect of Liquidity Risk, Premium Growth on the Performance of Quoted Insurance Firms in Nigeria: A Panel Data Analysis

  • Lasisi Isiaka Olalekan Department of Accounting and Management, Faculty of Arts and Social Sciences, Nigerian Defence Academy,Kaduna, Nigeria.
Keywords: Liquidity Risk, Claim Loss Ratio, Premium Growth, Performance and Insurance Companies.

Abstract

This study assesses the effect of liquidity risk on firm performance of listed insurance companies in Nigeria for the period of 2011-2015. The listed insurance firms are twenty Five (25) in numbers out of which a sample of twelve (12) were used for the study. Liquidity risk as the independent variable was proxy with leverage, claim loss ratio and premium growth, while the return on asset was used to proxy firm performance. The study adopts a panel multiple regression techniques and data were collected from secondary source through the annual reports of the firms after controlling for fixed/random effects.The findings of random effect reveal that leverage has significant negative effect on return on assets. The claim loss ratio has insignificant negative influence on return on assets while premium growth has positive and insignificant effect on firm performance of listed insurance companies in Nigeria. It is recommended among others that the managers, shareholders and other stake holders to checkmate and control liquidity risk as it have been found empirically to enhance the quality of the firm’s financial performance.

Downloads

Download data is not yet available.

References

Ahmed, N., Ahmed, A., & Usman, A. (2011). Determinants of performance: A case of life insurance sector of Pakistan. International Research Journal of Finance and Economics (61), 123-128.
Ali, F. A., Mohammed, S.B., & Amer, M.A.,( 2015), Corporate Governance, Firm Attributes and Financial Performance of Saudi Listed Banks. World Review of Business Research, 5 (3).
Agnes, W K., (2013) Relationship between Firm Characteristics and Financial Performance of Life Insurance Companies in Kenya. Unpublished Master Of Science In Finance, University Of Nairobi.
Ail, N., Tabari, Y., Ahmadi, M., & Emami, M. (2013). The Effect of Liquidity Risk on the Performance of Commercial Banks. International Research Journal of Applied and Basic Sciences, 4(6), 1624–1631.
Cucinelli, D. (2013). The relationship between liquidity risk and probability of default: Evidence from the euro area. Risk Governance and Control: Financial Markets and Institutions, 3(1), 42–50.
Charumati, B (2012). On the determinants of profitability of Indian life insurance. An empirical study, proceedings of the world congress on engineering. vol.1. London UK. (www.iaeg.org/publications/wae2012).
Daare, W. J. (2016). Determinants Of Non-Life Insurance Companies Profitability: An Empirical Study In India. International Journal of Innovative Research and Advanced Studies, 3(13).
Ferrouhi, E. M. (2014). Bank Liquidity and Financial Performance: Evidence from Moroccan Banking Industry. Business: Theory and Practice, 15(4), 351–361.
Hossein, M., Dezfouli, K., Hasanzadeh, A., & Shahchera, M. (2014). Inspecting the effectiveness of liquidity risk on banks profitability. Kuwait Chapter of Arabian Journal of Business and Management Review, 3(9), 191–207.
kamau, F & Njeru, A. (2016). Effect of Mergers on Financial Performance of Firms Listed at the Nairobi Securities Exchange. International Journal of Science and Research (IJSR) ISSN, 5(10), 867–872. https://doi.org/10.21275/ART20162288
Kambi, R., & Ali, A. I. (2016). Effects of Financial Risk Management Practices on Financial Performance of Listed Banks at the Nairobi Securities Exchange in Kenya. THE International Journal Of Business & Management, 4(4), 19–36.
Mehari, D., & Aemiro, T. (2013). Firm Specific Factors That Determine Insurance Companies’Performance in Ethiopia. European Scientific Journal, 9(10), 245–255. Retrieved from http://eujournal.org/index.php/esj/article/view/961
Muriithi, J. G., & Waweru, K. M. (2017). Liquidity Risk and Financial Performance of Commercial Banks in Kenya. International Journal of Economics and Finance, 9(3), 256. https://doi.org/10.5539/ijef.v9n3p256
Nikhik B, Kingshuk i, R. M. (2015). Factor Determining Financing Performance of Life insurance Companies of India-an Empirical Study. EPRA International Journal of Economic and Business Review, 2(8), 42–48.
O A, Yahaya & Lamidi, Y. (2015). Empirical Examination of the Financial Performance Of Islamic Banking In Nigeria : A Case Study Approach. International Journal of Accounting Research, 2(7), 1–13.
Otieno, S., & Nyagol, M. (2016). Empirical Analysis on Relationship between Liquidity risk management and financial performance of microfinance banks in Kenya. Research Journal of Finance and Accounting, 7(6), 115–142.
Saeed, U., & Khurram, N. (2015). Factors Influencing the Financial Performance of Non-Life Insurance Companies of Pakistan. International Journal of Empirical Finance, 4(6), 354–361.
Published
2018-01-27
How to Cite
Olalekan, L. I. (2018). Effect of Liquidity Risk, Premium Growth on the Performance of Quoted Insurance Firms in Nigeria: A Panel Data Analysis. American Finance & Banking Review, 2(1), 42-51. Retrieved from http://www.cribfb.com/journal/index.php/amfbr/article/view/128
Section
Articles