Performance Effect of Risk-based Capital Policy on Insurers: Longitudinal Microdata Evidence

Sunday S. Akpan, Fauziah Mahat, Nordin Bany-Ariffin and Annuar Nassir

Journal of African Business, 2021, vol. 22, issue 1, 85-105

Abstract: Risk-based capitalization (RBC) is an insurance regulation policy aimed at protecting policyholders. But effects of this policy on insurers’ performance are conjectural as empirical studies are scarce. This study investigates RBC influence, in the context of capital structure, on return on asset (ROA), return on equity (ROE) and earnings per share (EPS) of insurers using 2SLS fixed and random effect models. From the results, RBC improved ROA and EPS significantly, but reduced ROE insignificantly. It concluded that RBC policy make a significant positive contribution to ROA and EPS. ROE is not significantly affected by RBC policy for the period under review.

Date: 2021
References: Add references at CitEc
Citations:

Downloads: (external link)
http://hdl.handle.net/10.1080/15228916.2019.1695181 (text/html)
Access to full text is restricted to subscribers.

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:taf:wjabxx:v:22:y:2021:i:1:p:85-105

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/wjab20

DOI: 10.1080/15228916.2019.1695181

Access Statistics for this article

Journal of African Business is currently edited by Samuel Bonsu

More articles in Journal of African Business from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().