Consolidation, Institutional Efficiency and Financial Ratio Performance of Insurance Companies in Nigeria

Olurotimi Ogunwale., Professor Ishola Rufus Akintoye., Charles Ogboi. and Peter Ifeanyi Ogbebor
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Olurotimi Ogunwale.: Department of Finance, Babcock University, Ilishan-Remo, Ogun State, Nigeria
Professor Ishola Rufus Akintoye.: Department of Accounting, Babcock University, Ilishan-Remo, Ogun State, Nigeria
Charles Ogboi.: Department of Finance, Babcock University, Ilishan-Remo, Ogun State, Nigeria
Peter Ifeanyi Ogbebor: Department of Finance, Babcock University, Ilishan-Remo, Ogun State, Nigeria

International Journal of Research and Innovation in Social Science, 2024, vol. 8, issue 7, 1044-1054

Abstract: The research investigated the impact of consolidation and institutional efficiency on the financial ratio performance of insurance companies in Nigeria covering the period from 2011 to 2022. The estimation technique utilized were feasible generalized least squares (FGLS) on a sample of five insurance companies was taken. The key variables used in the analysis included debt-equity-ratio (DOER) as dependent variable and claims processing efficiency (CPE), risk management effectiveness (RME), and regulatory compliance (RC) as independent variables. The findings revealed that while regulatory compliance (RC) has a significant positive impact on DOER, with an increase in RC leading to an 8.955% increase in DOER, claims processing efficiency (CPE) and risk management effectiveness (RME) were not found to have a significant impact on DOER. Specifically, an increase in CPE was associated with a 0.018% decrease in DOER, and an increase in RME was associated with a 0.864% increase in DOER, but these relationships were not statistically significant. These results suggest that while RC is a significant factor influencing changes in DOER for insurance companies in Nigeria, CPE and RME may not play a significant role in determining DOER. The study thus recommended, among others, that the insurance firm should improve the regulatory framework governing insurance companies to ensure that it encourages consolidation efforts. This will help improve the insurance firms’ debt and equity finances.

Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:bcp:journl:v:8:y:2024:i:7:p:1044-1054

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