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Cited by 1Insurance and Financial Risk ManagementFinancial Analysis and Corporate GovernanceCorporate Finance and Governance

Factors affecting the profitability of non-life insurance companies in Nepal

Open access
Subedi, Utsab·2024·Nepalese Journal of Business
DOI 10.3126/njb.v11i4.79737
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Abstract

This study examines the determinants of profitability of Nepalese insurance companies. Return on assets and return on equity are the dependent variables. The selected independent variables are firm size, liquidity, age of firms, financial leverage, growth rate of premiums, and volume of capital. The study is based on secondary data of 13 insurance companies with 104 observations for the study period from 2013/14 to 2020/21. The data were collected from the annual reports of Rastriya Beema Authority, reports published by Ministry of Finance and annual reports of selected Nepalese insurance companies. The regression models are estimated to test the significance and effect of firm specific factors on the profitability of Nepalese non-life insurance companies. The study showed that liquidity ratio has a negative impact on return on assets and return on equity. It means that increase in liquidity ratio leads to decrease in return on assets and return on equity. In addition, volume of capital has a positive impact on return on assets and return on equity. It shows that higher the volume of capital, higher would be the return on assets and return on equity. Similarly, firm size has a positive impact on return on assets and return on equity. It shows that larger the firm size, higher would be the return on assets and return on equity. Furthermore, firm age has a positive impact on return on assets and return on equity. It means that increase in the age of the firms leads to increase in the return on assets and return on equity. Likewise, premium growth rate has a positive impact on return on assets and return on equity. It means that higher the premium growth rate, higher would be the return on assets and return on equity. In contrast, leverage ratio has the negative impact on return on assets. It indicates that higher the leverage ratio, lower would be the return on assets and return on equity.

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Authors
Subedi, U.
Corresponding author
Subedi, Utsab
Venue
Nepalese Journal of Business
Publisher
Nepal Journals Online (JOL)
Published
2024-12-31
Volume
11
Issue
4
Pages
88-105
ISSN
2392-4780 (ISSN-L)
DOI
10.3126/njb.v11i4.79737
OpenAlex
W4411218066
Cited by
1
References
37
Citations by year
2025: 1
FWCI
0.36
Type
journal article
Language
en
Open access
Locations
Nepalese Journal of Business. (publishedVersion)
Topics
  • Social Sciences › Economics, Econometrics and Finance › Economics and Econometrics › Insurance and Financial Risk Management
  • Social Sciences › Business, Management and Accounting › Accounting › Financial Analysis and Corporate Governance
  • Social Sciences › Business, Management and Accounting › Accounting › Corporate Finance and Governance
Keywords
insurance profitability, non-life insurance companies, return on assets, return on equity, liquidity ratios, leverage, firm size, firm age

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