Firm-Specific Determinants of Profitability in the Insurance Sector: Empirical Evidence from Nigeria

Odunayo Olarewaju (), Titilayo Oladejo (), Clement Olaoye (), Olusola Olarewaju () and Adeduro Ogunmakin ()
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Odunayo Olarewaju: Durban University of Technology
Titilayo Oladejo: Obafemi Awolowo University
Clement Olaoye: Ekiti State University
Olusola Olarewaju: Ekiti State University
Adeduro Ogunmakin: Federal University of Oye

EuroEconomica, 2018, issue 1(37), 95-107

Abstract: This study investigates firm-specific factors that affect the profitability of 8 composite insurance company in Nigeria from 2009-2015. We adopt an explanatory research design and analyze the secondary data gathered using the panel data regression model. The results reveal that while a negative linear relationship exists among return on asset, leverage, tangibility, and size, there is a positive linear relation between return on asset, risk, and growth of the composite insurance company in Nigeria. The probability values 0.04, 0.00 ? 0.05 show that leverage and tangibility are statistically significant at 5 and 1 percent levels. The Hausman test reveals that the random effect model is better than the fixed effect model at determining the profitability of the composite insurance company in relation to the firm- specific factors under consideration. The study, therefore, concludes that the leverage of a composite insurance company as revealed in this study is high, and as a result, limits the average returns on asset. This implies that firm-specific factors are relevant in enhancing a composite insurance company’s profitability and sustainability in Nigeria.

Keywords: Composite insurance; tangibility; firm-specific; risk level; leverage (search for similar items in EconPapers)
Date: 2018
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