The Impact of Firm-Specific and Macroeconomic Factors on the Financial Performance of Insurance Industry: Evidence from Ethiopia.

Abstract

Abstract In the current business environment, the financial performance of companies and its determinant factors are considered as a key issues. The purpose of this study was to examine the impact of firm-specific and macroeconomic factors on the financial performance of the insurance industry in Ethiopia, which covers a 10-year panel study from 2008 to 2017 based on data extracted from the financial statements of nine insurance companies and macroeconomic data from the World Bank data base. Data was collected from from secondary source only, descriptive research design used for this study, nine insurance company selected as a sample based on judmental sampling thechnique and employed the pooled OLS regression methoods to figure out the relationship between the explanatory variables and the financial performance of the insurance firm in ethiopia. The results obtained from the regression analysis shows that efficiency, size of insurance and liquidity have a statistically significant and positive effect on insurance financial performance, while firm leverage and the lending interest rate have a statistically negative significant effect on the financial performance of Ethiopian insurance companies. However, the impact of GDP and inflation is insignificant. Finally this study results recommends to insurance managers to give careful attention for those firm specific and macro-economic determinant variables to Improve the financial performance of the business.