DETERMINANTS OF PROFITABILITY IN CASE OF ETHIOPIAN INSURANCE COMPANIES

Abstract

The profitability of insurance companies has been the focus of several studies in emerging economies across the world. However, when it comes to Ethiopia it received little attention. Therefore, the researcher conducts this study entitled “The Determinants of Insurance Companies Profitability in Ethiopian”. The major objective of this study was to investigate the most important determinant of profitability in the insurance sector of Ethiopia by using regression analysis. This study was based on entirely secondary data collected from NBE and MOFEC. This study covers the time period from 2008 – 2018 in order to increase numbers of observations. In addition, this study used Explanatory research design to check cause and effect relationship between dependent variable and independent variables besides, fixed effect model was used. Under this study, both internal and external factors were included. Internal factors used in this study include, leverage, liquidity, and tangibility of asset) whereas, the external factor, inflation. The regression result reveals that have significant impact on the profitability of Ethiopian insurance companies measured by liquidity, leverage and inflection have negative and significant effect on profitability of Ethiopian insurance companies, Whereas Tangibility is positive and significant effect on profitability of Ethiopian insurance companies.