Artificial Neural Network for Classifying Financial Performance in Jordanian Insurance Sector

Rania Al Omari, Rami S. Alkhawaldeh () and Jamil J. Jaber
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Rania Al Omari: Department of Accounting, School of Business, The University of Jordan, Aqaba 77110, Jordan
Rami S. Alkhawaldeh: Department of Computer Information Systems, The University of Jordan, Aqaba 77110, Jordan
Jamil J. Jaber: Department of Finance, School of Business, The University of Jordan, Aqaba 77110, Jordan

Economies, 2023, vol. 11, issue 4, 1-16

Abstract: Over the past few decades, financial performance has attracted researchers’ attention, especially in the insurance sector. Insurance is a tool for the growth and sustainability of both rising and developing economies. It promotes economic stability for people, organizations, and governments by taking on risk and spreading it across the market. We intend to classify insurance companies’ financial performance in Jordan’s Amman Stock Exchange (ASE). The sample size is 15 out of 22 selected insurance firms from 2008 to 2020. We apply the Multi-Layer Perceptron (MLP) model for the detection of (high/low) total asset turnover (TAT) as output, while we select the subrogation (SB), claims paid (CP), market capitalization (MC), and total shareholders’ equity (SE) as input to the MLP model. The performance of the MLP model is evaluated using different criteria, namely the false positive rate (FP rate), false negative rate (FN rate), F-measure, precision, and accuracy (ACC). The results show that MLP is efficient and performs well in multiple criterion tests through iteration growth. Based on our knowledge, the paper assesses the financial performance of Jordanian insurance firms, which has not been investigated previously. Furthermore, this study gives valuable information to regulators and policymakers to improve asset management efficiency in the insurance sector.

Keywords: total asset turnover; subrogation; claims paid; market capitalization; total shareholders’ equity; JEL classification (search for similar items in EconPapers)
JEL-codes: E F I J O Q (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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