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Dynamic cost productivity and economies of scale of Ghanaian insurers

Kwaku Ohene-Asare (), Jones Kofi Anyimadu Asare and Charles Turkson
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Jones Kofi Anyimadu Asare: Presbyterian University College
Charles Turkson: University of Ghana Business School

The Geneva Papers on Risk and Insurance - Issues and Practice, 2019, vol. 44, issue 1, No 7, 148-177

Abstract: Abstract Previous insurance efficiency studies have focused on cost efficiency or static and dynamic technical productivity and therefore ignored dynamic cost productivity. Previous studies have also failed to consider economies of scale at the firm level. This study employs a panel data of insurers to assess the dynamic cost productivity growth in Ghana from 2005 to 2014. We also explore the determinants of cost productivity growth in the Ghanaian insurance industry. We find that the introduction of the Insurance Act of 2006 saw some large cost productivity growths; however, since 2012 the industry has been facing some marginal cost productivity decline. The cost improving policies in the Act that encouraged cost efficiency must be revisited by regulators, as it seems that the industry is going back to the pre-regulation cost environment. Additionally, not many insurers have been operating at the optimal production scale over the period.

Keywords: Cost Malmquist Index; Economies of scale; Insurance firms; Data envelopment analysis (search for similar items in EconPapers)
Date: 2019
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DOI: 10.1057/s41288-018-0111-6

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