The Effect of Investment on Financial Performance of Insurance Company in Ethiopia
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Date
2018-03
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Addis Ababa University
Abstract
This thesis investigates the effect of investment on financial performance of insurance company in Ethiopia. The objective of this study was to investigate the Effect of Investment on Financial Performance of Insurance Company in Ethiopia. This aimed investment improves financial performance of insurance companies or not. The analysis considered the presence of different insurance companies i.e. public and private insurance companies. The study used a sample of 9 insurance out of 17 from 2006 to 2016 year financial statements. The random effect regression technique and correlation was used to analyse the data using the econometric package Eviews software. The sampled data was also presented and analysed by using descriptive statistic by mean, standard deviation, maximum and minimum. The dependent variables used to estimate insurance companies performances were return on asset. The researcher used Investment in fixed asset (IFA), Investment in government securities (IGS), Investment in equity (IE) and Investment in fixed time deposit (FTD) as an independent variables. The researcher also used insurance size and liquidity ratio as control variables. The study finds that insurance performance measurement i.e. ROA has a strong and significant relationship with Investment in fixed asset and investment in government securities. On the other hand investment in equity has a negative and insignificant effect on return on asset. Investment in government security and fixed assets have also shown significant and positive effect. However, investment in fixed time deposit has a positive and insignificant effect on return on asset at 5% level of significant. Furthermore insurance size and liquidity ratio has a significant and positive effect on return on asset. So the study recommended insurance companies are advised to invest in Fixed asset & Government Securities in order to enhance the financial performances.
Description
A Thesis Submitted to the Department of Accounting & Finance in Partial Fulfillment of the Requirements for the Degree of Master of Science in Accounting and Finance.
Keywords
Assets, Investment, Securities