EuroEconomica, Vol 37, No 1 (2018)

Firm-Specific Factors that Affect the Profitability of Nigerian Insurance Sector

Odunayo Magret Olarewaju, Titilayo Moromoke Oladejo, Olusola Olawale Olarewaju


This study investigates the firm-specific factors that affect the profitability of the composite insurance company in Nigeria from 2009-2015. The work adopts explanatory research design and also analyzes the secondary data gathered using panel data regression model. The result reveals that while a negative linear relationship exists between the return on asset, leverage, tangibility, and size, there is a positive linear relation between the return on asset, risk and growth of the composite insurance company in Nigeria. The probability values 0.04, 0.00 ˂ 0.05 show that leverage, and tangibility are statistically significant at 5 and 1 percent level; the Hausman test reveals that the random effect model is better than the fixed effect model in determining profitability of the composite insurance company in relation to the firm- specific factors under consideration. The study, therefore, concludes that the leverage of composite insurance company as revealed in this study is high and as a result limits the average returns on asset and that the firm- specific factors are relevant in enhancing the composite insurance company’s profitability and its sustainability in Nigeria.

JEL Codes: E020; G22


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