Impacts of Insurers’ Financial Insolvency on Non-Life Insurance Companies’ Profitability: Evidence from Bangladesh

Md. Nur Alam Siddik (), Md. Emran Hosen, Md. Firoze Miah, Sajal Kabiraj (), Shanmugan Joghee and Swamynathan Ramakrishnan
Additional contact information
Md. Nur Alam Siddik: Department of Finance and Banking, Begum Rokeya University, Rangpur 5404, Bangladesh
Md. Emran Hosen: Department of Finance and Banking, Begum Rokeya University, Rangpur 5404, Bangladesh
Md. Firoze Miah: Department of Finance and Banking, Begum Rokeya University, Rangpur 5404, Bangladesh
Sajal Kabiraj: School of Entrepreneurship and Business, Häme University of Applied Sciences Ltd. (HAMK), 37630 Valkeakosk, Finland
Shanmugan Joghee: School of Business, Skyline University College, University City of Sharjah, Sharjah 1797, United Arab Emirates
Swamynathan Ramakrishnan: Amity Business School, Amity University, Dubai 345019, United Arab Emirates

IJFS, 2022, vol. 10, issue 3, 1-15

Abstract: A stable and healthy insurance industry plays a vital role in sustaining an economy resistant to economic shocks by providing an efficient risk-transition mechanism. There is a relative scarcity of research inspecting the impact of insurers’ financial insolvency on the profitability of insurance firms. Employing 2011–2019 panel data of 16 non-life insurance companies operating in Bangladesh, this research endeavors to examine the impacts of insurers’ financial insolvency on the profitability of insurance companies measured by return ratios, return on assets (ROA), and return on equity (ROE). Fixed-effect regression outcome implies that insurers’ financial insolvency has a significant adverse influence on non-life insurance companies’ profitability. Further findings indicate that financial leverage, technical provision, age, and inflation have a noteworthy adverse influence on profitability. The outcomes of this research are of greater significance for policymakers in tackling insolvency and formulating policies to boost the growth of insurance profitability. In addition, this study aims to serve as a benchmark for other countries’ insurance industries to emulate recovery strategies from financial insolvency.

Keywords: financial insolvency; non-life insurance companies; financial leverage; return on equity; return on asset; Bangladesh (search for similar items in EconPapers)
JEL-codes: F2 F3 F41 F42 G1 G2 G3 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www.mdpi.com/2227-7072/10/3/80/pdf (application/pdf)
https://www.mdpi.com/2227-7072/10/3/80/ (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:gam:jijfss:v:10:y:2022:i:3:p:80-:d:915801

Access Statistics for this article

IJFS is currently edited by Ms. Hannah Lu

More articles in IJFS from MDPI
Bibliographic data for series maintained by MDPI Indexing Manager ().