Risk behaviour and insurance efficiency: the role of ownership and regulations from an emerging economies

Daniel Ofori-Sasu (), John Kuwornu (), Gloria Clarissa Dzeha () and Baah Aye Kusi ()
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Daniel Ofori-Sasu: University of Ghana Business School
John Kuwornu: Asian Institute of Technology
Gloria Clarissa Dzeha: Central University
Baah Aye Kusi: University of Ghana Business School

SN Business & Economics, 2022, vol. 2, issue 7, 1-30

Abstract: Abstract The paper examines the effect of risk-taking behaviours, ownership and regulations on insurance efficiency. The study uses the robust 2-stage Simar and Wilson simultaneous truncated regression for 40 Ghanaian insurance firms over 2008–2017 period. First, it provides evidence that insurance risk-taking behaviours reduce insurance efficiency. It found that regulations complement insurance ownership in explaining insurers’ efficiency. Finally, it shows that insurance ownership and regulations are important in reducing the negative impact of risk-taking behaviours on insurance efficiency in the long run. The policy implication is that shareholders should align their interest with managers by designing effective complementarity framework between ownership structures and risk-taking behaviours to yield an optimal insurance efficiency. Regulators should provide regulatory frameworks that align with the interest of inside ownership of insurers to provide effective risk management that generate optimal insurance efficiency.

Keywords: Insurance efficiency; Regulations; Risk-taking behaviours; Insurance ownership (search for similar items in EconPapers)
JEL-codes: G14 G2 G22 G28 G32 (search for similar items in EconPapers)
Date: 2022
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DOI: 10.1007/s43546-022-00254-x

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