Determinants of financial solvency in Algerian insurance companies: an econometric analysis using ardl

Imene Marir and Salhi Asma

MPRA Paper from University Library of Munich, Germany

Abstract: This study aims to investigate the determinants of financial solvency for Algerian insurance companies and the strength and direction of their impact on the solvency margin of these companies. This was done by constructing an econometric model of financial solvency and its influencing variables using the Autoregressive Distributed Lag (ARDL) methodology with Eviews 12 software for the period 1998–2021. The study found that the determinants of solvency—namely, insurance premiums, compensation, financial investments, and technical provisions—maintain a long-term equilibrium relationship with financial solvency. The findings revealed that a 1% increase in insurance premiums, financial investments, and technical provisions will lead to an increase in the financial solvency margin by 1.75%, 0.38%, and 0.78%, respectively, in the long term. Moreover, the study identified a long-term inverse relationship between compensation and the financial solvency margin, where a 1% increase in compensation results in a 1.79% decrease in the financial solvency margin. Additionally, the study found that any 1% shock to solvency determinants will have a lasting impact for one year and seven months before returning to its normal equilibrium state.

Keywords: Financial Solvency Margin; Solvency Determinants; Insurance Companies; Algerian Solvency System; ARDL. (search for similar items in EconPapers)
JEL-codes: E1 H00 O2 (search for similar items in EconPapers)
Date: 2024-12-28, Revised 2025-02-21
References: Add references at CitEc
Citations:

Published in Science, Education and Innovations in the Context of Modern Problems 1.8(2025): pp. 500-521

Downloads: (external link)
https://mpra.ub.uni-muenchen.de/124126/1/MPRA_paper_124126.pdf original version (application/pdf)

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:pra:mprapa:124126

Access Statistics for this paper

More papers in MPRA Paper from University Library of Munich, Germany Ludwigstraße 33, D-80539 Munich, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Joachim Winter ().