Factors Determining Profitability of Private Insurance Companies in Ethiopia: Panel Evidence
No Thumbnail Available
Date
2017-06
Authors
Journal Title
Journal ISSN
Volume Title
Publisher
Addis Ababa University
Abstract
Profitability is one of the most important objectives of financial management because one goal of financial management is to maximize the owner` s wealth. This paper examines the effects of firm specific factors (volume of capital, leverage ratio, liquidity ratio, tangibility of assets and managerial efficiency) and one macroeconomic factor, economic growth rate on profitability proxies by ROA. Profitability is dependent variable while volume of capital, leverage, liquidity ratio, managerial efficiency, tangibility of assets and economic growth rate) are independent variables. The sample in this study includes six of the listed private insurance companies for ten years (2007-2016). Secondary data obtained from the financial statements (Balance sheet and income statement) of insurance companies’, financial publications of NBE are analyzed. For the analysis task E-viwes9 software and stata12 were used. From the regression results; economic growth, tangibility of asset, volume of capital and managerial efficiency are identified as most important determinant factors of profitability among these variables economic growth, leverage, and volume of capita are found to be positively related. In contrast, managerial efficiency and tangibility of assets are negatively but, significantly related with profitability. Lastly, liquidity ratio and leverage are not significantly related with profitability.
Description
Research Project submitted to the College of Business and Economics of Addis Ababa University in Partial Fulfillment of the requirements for the Degree of Master of Business Administration (MBA) in Management
Keywords
Determinants, Private insurance Companies, Profitability