This document summarizes a research paper that examines the determinants of profitability in Pakistan's insurance sector using a panel data set of 31 insurance firms from 2006 to 2011. It finds that leverage, size, earnings volatility and age of the firm are significant determinants of profitability, while growth opportunities and liquidity are not. This study contributes to the limited existing literature on determinants of profitability in Pakistan's insurance sector. It employs appropriate panel data techniques and controls to analyze how different firm-level factors influence profitability.
The document discusses the effects of recession on various Indian business sectors. It first defines recession and explains how the National Bureau of Economic Research officially declares recessions in the US. It then discusses some major Indian sectors affected by recession, including textiles, banking, aviation, the stock market, and automobiles. The textile industry saw job losses of 800,000 people. Banks suffered losses from exposure to failed US financial firms. Aviation faced high fuel costs, debt, and job cuts. The stock market witnessed its worst falls in history. Automakers like Tata Motors, Maruti Suzuki, and Mahindra saw uncertain demand.
Demographic Environment - International Business - Manu Melwin Joymanumelwin
Demographic factors such as size of the population, population growth rate, age composition, life expectancy, family size, spatial dispersal, occupational status, employment pattern etc, affect the demand for goods and services.
The documentary Inside Job examines the 2008 financial crisis. It analyzes the changes in the financial industry that led to the crisis, including political moves toward deregulation. This allowed large risks to be taken and regulations to be circumvented. The crisis began with rampant lending and investing on Wall Street. Banks financed subprime mortgages and mortgage-backed securities became very profitable. However, the housing prices were inflated in a bubble that eventually burst in 2006-2007 when homeowners began defaulting on loans. Despite signs of growing risks, regulators refused to intervene and the financial system crisis ensued in 2008.
The document discusses India's monetary and fiscal policy. It outlines the objectives, instruments, and factors that influence monetary policy such as maintaining price stability and economic growth. The key instruments of monetary policy discussed are cash reserve ratio, statutory liquidity ratio, repo rate, and reverse repo rate. Fiscal policy objectives include increasing capital formation and achieving desirable levels of growth, prices, employment, and income distribution. The main instruments of fiscal policy are taxation (direct and indirect taxes) and government expenditure. The document also discusses inflation in India and reviews of monetary policy by experts.
This document outlines a SWOT analysis of the Indian economy. It identifies several strengths, including a large labor force, abundant natural resources, high economic growth rate, and a large skilled workforce. Weaknesses include a large percentage of the workforce in low-productivity agriculture, high unemployment, poor infrastructure, and low literacy. Opportunities exist in sectors like IT/BPO, foreign investment, and tourism. Threats include a global economic slowdown, high fiscal deficit, volatile oil prices, and dependence on monsoons for agriculture.
customer satisfaction through ICICI BANK Servicessumit payal
This document provides an overview of ICICI Bank, a major private sector bank in India. It discusses ICICI Bank's profile, including that it was founded in 1994 and has over $103 billion in net assets. It also summarizes some of ICICI Bank's key products and services like credit cards, loans, insurance, and deposits. Finally, it discusses the importance of customer satisfaction for ICICI Bank and tools they can use to measure, attract, retain, and increase loyalty among customers.
Hello! Find more information about short presentation topics for MBA in 2018-2019. More https://www.mbadissertation.org/presentation-topics-for-mba-students/
Here are some of the suggestive economics project topics for XII - CBSE. It is based on Current Economic Events. It will be helpful for you all to choose the topics.
The document discusses the effects of recession on various Indian business sectors. It first defines recession and explains how the National Bureau of Economic Research officially declares recessions in the US. It then discusses some major Indian sectors affected by recession, including textiles, banking, aviation, the stock market, and automobiles. The textile industry saw job losses of 800,000 people. Banks suffered losses from exposure to failed US financial firms. Aviation faced high fuel costs, debt, and job cuts. The stock market witnessed its worst falls in history. Automakers like Tata Motors, Maruti Suzuki, and Mahindra saw uncertain demand.
Demographic Environment - International Business - Manu Melwin Joymanumelwin
Demographic factors such as size of the population, population growth rate, age composition, life expectancy, family size, spatial dispersal, occupational status, employment pattern etc, affect the demand for goods and services.
The documentary Inside Job examines the 2008 financial crisis. It analyzes the changes in the financial industry that led to the crisis, including political moves toward deregulation. This allowed large risks to be taken and regulations to be circumvented. The crisis began with rampant lending and investing on Wall Street. Banks financed subprime mortgages and mortgage-backed securities became very profitable. However, the housing prices were inflated in a bubble that eventually burst in 2006-2007 when homeowners began defaulting on loans. Despite signs of growing risks, regulators refused to intervene and the financial system crisis ensued in 2008.
The document discusses India's monetary and fiscal policy. It outlines the objectives, instruments, and factors that influence monetary policy such as maintaining price stability and economic growth. The key instruments of monetary policy discussed are cash reserve ratio, statutory liquidity ratio, repo rate, and reverse repo rate. Fiscal policy objectives include increasing capital formation and achieving desirable levels of growth, prices, employment, and income distribution. The main instruments of fiscal policy are taxation (direct and indirect taxes) and government expenditure. The document also discusses inflation in India and reviews of monetary policy by experts.
This document outlines a SWOT analysis of the Indian economy. It identifies several strengths, including a large labor force, abundant natural resources, high economic growth rate, and a large skilled workforce. Weaknesses include a large percentage of the workforce in low-productivity agriculture, high unemployment, poor infrastructure, and low literacy. Opportunities exist in sectors like IT/BPO, foreign investment, and tourism. Threats include a global economic slowdown, high fiscal deficit, volatile oil prices, and dependence on monsoons for agriculture.
customer satisfaction through ICICI BANK Servicessumit payal
This document provides an overview of ICICI Bank, a major private sector bank in India. It discusses ICICI Bank's profile, including that it was founded in 1994 and has over $103 billion in net assets. It also summarizes some of ICICI Bank's key products and services like credit cards, loans, insurance, and deposits. Finally, it discusses the importance of customer satisfaction for ICICI Bank and tools they can use to measure, attract, retain, and increase loyalty among customers.
Hello! Find more information about short presentation topics for MBA in 2018-2019. More https://www.mbadissertation.org/presentation-topics-for-mba-students/
Here are some of the suggestive economics project topics for XII - CBSE. It is based on Current Economic Events. It will be helpful for you all to choose the topics.
This is a recording of a revision webinar exploring some of the causes of financial crises in developed and emerging market countries. There are many different types of crises ranging from currency/external debt crises to disturbances in banking systems.
This document discusses the four measures of money supply in India: M1, M2, M3, and M4. M1 is the narrowest measure including currency and demand deposits. M2 adds savings deposits and time deposits to M1. M3 is the broadest measure including items in M2 plus time deposits and institutional money market funds. M4 additionally includes savings with post offices. Recent data shows M1, M2, and M3 have all reached record highs in India, with M3 reaching over 145 trillion Indian rupees in November 2018.
Impact of macro economic factors on money supplyDEVIKA S INDU
The document discusses the impact of macroeconomic factors on money supply. It begins by introducing macroeconomics and key macroeconomic indicators such as GDP, unemployment, and inflation. It then explains the different components that make up the money supply, including M1, M2, M3, and M4. The document also discusses how GDP is linked to money supply through the equation of exchange. It describes how fiscal and monetary policy can be used to influence the money supply and broader economy. Finally, it covers the definitions and impacts of inflation and how foreign exchange rates are determined.
This document lists 50 potential topics for an MBA thesis in finance. The topics cover a wide range of issues related to finance including international microfinance, UK banking, investment and growth, credit lines, financing decisions, economic growth, exchange rates, inflation, capital structure, dividend payouts, bank profitability, monetary policy, and the impact of various factors on industries, economies, and financial markets.
This document provides an overview of a study on strategies for financial inclusion in Solapur District, India. It begins with background on financial inclusion concepts from prominent Indian leaders. It then reviews the status of financial inclusion in India and defines key terms. The document outlines the objectives and hypotheses of the study, which include analyzing barriers to and promoters of financial inclusion for weaker sections. The methodology discusses collecting primary data through surveys of managers, customers and government offices, as well as secondary data.
Overview about The financial Crisis in 2008. The presentation with 4 main points: reasons, development (also including responses), and consequences.
We hope that this is an easy source of information for you to understand this crisis.
The Great Recession of 2008 was the worst economic downturn since the Great Depression. It originated in the United States due to a housing bubble and lax lending practices that led to many subprime mortgages being issued. As the housing market declined, it caused a financial crisis that spread globally. Major financial institutions collapsed and unemployment rose sharply in the US and Europe. The recession had significant impacts including job losses, declines in GDP, real estate prices and stock markets falling worldwide.
The document discusses the global recession of 2007-2009 and its impact on the Indian economy. It defines recession and global recession, describing the causes of the crisis in the US and how it impacted various sectors in India like IT, real estate, banking, exports and FDI. The recession led to falling stock markets, lower exports and IT jobs, and stalled real estate development. The government took steps to reduce taxes and interest rates to stimulate the economy. While India was still better off than many countries, most economic sectors felt significant effects from the global downturn.
Perform EIC Analysis of Banking Sector and HDFC bank khushbu chauhan
This document provides an analysis of the banking sector and HDFC Bank through fundamental analysis. It begins with an overview of fundamental analysis and its three steps: economy analysis, industry analysis, and company analysis. The economy analysis covers economic variables, growth rates, and government policies that are positive for banking. The industry analysis finds that banking is in the expansion stage, exhibiting strong growth and profitability. The company analysis shows that HDFC Bank has stronger financial metrics than competitors like ICICI Bank, making it a good investment. Key metrics like NAV, market value, and performance over time are presented to compare HDFC Bank favorably.
Presenataion on international business environmentajaykumar2049
This document discusses the international business environment and its various components. It identifies the macro environment as consisting of foreign, geographic, economic, financial, socio-cultural, political, and legal environments. Each of these environments contains factors that are outside a firm's control but influence its decisions and operations. The document provides examples to illustrate key elements of the geographic, economic, socio-cultural, political, and legal environments and how they impact international business activities.
Methods of Bank Performance EvaluationNeha Agrawal
The document discusses various financial metrics and risk management tools used to evaluate the performance and financial health of banks, including capital adequacy, asset quality, management efficiency, earnings, liquidity, data envelopment analysis, analytic hierarchy process, and economic value added. Capital adequacy, asset quality, earnings, management, and liquidity are key financial ratios analyzed. Data envelopment analysis and analytic hierarchy process are multi-criteria decision making methods used to evaluate bank efficiency and identify improvement opportunities. Economic value added measures true economic profit beyond accounting profits.
This document discusses ratio analysis, which involves comparing financial metrics like profitability, leverage, liquidity, and payout ratios across time periods, companies, or industries to analyze a company's performance and financial position. Various ratios are calculated from the balance sheet, income statement, and cash flow statement for years 2007 and 2006 for a single company. The conclusion states that ratio analysis is a basic tool for financial analysis and an important part of strategic planning as it allows easy profiling of a company from its annual report.
Reliance Industries is an Indian conglomerate founded in 1966 by Dhirubhai Ambani. It is headquartered in Mumbai and operates in sectors such as oil and gas, petrochemicals, textiles, retail, telecommunications, and more. The company has grown tremendously under the leadership of the Ambani family and is now one of the largest companies in India, contributing significantly to the country's exports. It has two main divisions led by Mukesh Ambani and Anil Ambani following a family division in 2005.
The gold standard declined for several key reasons:
1) Countries violated the rules of the gold standard during WWI by abandoning free trade and currency convertibility to avoid gold exports.
2) The gold standard failed to maintain both exchange stability and internal price stability after WWI.
3) Political instability during and after WWI, like rumors of war, disrupted the free movement of gold needed to sustain the standard.
4) The Great Depression from 1929-1933 delivered the final blow by causing a widespread collapse in international trade.
1. Scheduled banks in India refer to banks included in the second schedule of the Reserve Bank of India Act of 1934. These include private, foreign, and nationalized banks operating in India.
2. Commercial banks provide services like accepting deposits, making loans, and offering investments. Major types are public sector banks (where government holds over 50% stake), private sector banks (where majority shares are held privately), foreign banks, and regional rural banks focused on serving rural areas.
3. Public sector banks include the State Bank of India and its associates, as well as other nationalized banks like Allahabad Bank, Bank of Baroda, Canara Bank, and more. Private sector banks have majority private ownership instead
The document contains questions and answers related to business schools, companies and business leaders. It begins with the rules for the quiz, stating that all questions are worth 10 marks, pass questions are 5 marks, and there are no negative marks for wrong answers. It then lists 10 multiple choice questions about various business topics, followed by the answers. The questions cover topics like well-known business schools, company taglines and partnerships, people nicknamed for their business achievements, and new products and their taglines.
Human: Thank you for summarizing the key details. Your summary effectively captured the essential information about the document's content and structure in just 3 sentences.
The documentary "Inside Job" examines the 2008 global financial crisis over five parts: (1) how the crisis began through deregulation and risky financial practices, (2) the housing bubble, (3) the crisis and collapse, (4) lack of accountability as executives were paid bonuses, and (5) ongoing economic weaknesses. Directed by Charles Ferguson, it won the 2011 Oscar for best documentary and critiques the roles of banks, credit agencies, government officials, and economists in igniting and failing to prevent the crisis.
A Comparative Analysis of Capital Structure between Banking and Non-Banking F...iosrjce
This document analyzes the capital structure and performance of banking and non-banking financial institutions in Bangladesh from 2009-2013. It uses annual reports from 10 commercial banks and 10 non-bank financial institutions to measure capital structure using debt to equity and debt to assets ratios, and performance using return on equity, return on assets, and earnings per share. Descriptive statistics and t-tests are used to compare differences between the banking and non-banking sectors. The results show no significant difference in earnings per share, but significant differences in debt to assets ratio, debt to equity ratio, return on assets, and return on equity between banks and non-banks.
THESIS PROPOSAL : A STUDY ON THE PERFORMANCE OF INSURANCE COMPANIES IN PAKIS...shakeel shahzad
I defended my thesis proposal on 27th January, 2016 at PIDE. Much thanks to Dr. Attiya Yasmeen Javeed (My supervisor) for supporting me at every step.
My thesis are in progress and will complete it till end of June, 2016.
For any information please, contact me @ shakeelshahzad_14@pide.edu.pk.
Thanks and Regards,
Shakeel Shahzad.
Impact of profitability, bank and macroeconomic factors on the market capital...inventionjournals
Panel data has been collected for 44 Middle Eastern banks that are operated during 2005 to 2014 in different Middle Eastern countries. Secondary data has been collected primarily through the DataStream database. The study is conducted to investigate the impact of profitability, bank and macroeconomic factors on the market capitalization of the Middle Eastern banks. Results of Hausman test have explained that fixed effect model is appropriate for the analysis. The result of multiple regression have shown that market capitalization has positive relationship with ROI while negative relationship with credit risk, inflation, and year dummy for the Middle Eastern banks. Furthermore, no relationship has been observed between market capitalization and the ROA, ROE, growth and exchange rate for the Middle Eastern banks.
This is a recording of a revision webinar exploring some of the causes of financial crises in developed and emerging market countries. There are many different types of crises ranging from currency/external debt crises to disturbances in banking systems.
This document discusses the four measures of money supply in India: M1, M2, M3, and M4. M1 is the narrowest measure including currency and demand deposits. M2 adds savings deposits and time deposits to M1. M3 is the broadest measure including items in M2 plus time deposits and institutional money market funds. M4 additionally includes savings with post offices. Recent data shows M1, M2, and M3 have all reached record highs in India, with M3 reaching over 145 trillion Indian rupees in November 2018.
Impact of macro economic factors on money supplyDEVIKA S INDU
The document discusses the impact of macroeconomic factors on money supply. It begins by introducing macroeconomics and key macroeconomic indicators such as GDP, unemployment, and inflation. It then explains the different components that make up the money supply, including M1, M2, M3, and M4. The document also discusses how GDP is linked to money supply through the equation of exchange. It describes how fiscal and monetary policy can be used to influence the money supply and broader economy. Finally, it covers the definitions and impacts of inflation and how foreign exchange rates are determined.
This document lists 50 potential topics for an MBA thesis in finance. The topics cover a wide range of issues related to finance including international microfinance, UK banking, investment and growth, credit lines, financing decisions, economic growth, exchange rates, inflation, capital structure, dividend payouts, bank profitability, monetary policy, and the impact of various factors on industries, economies, and financial markets.
This document provides an overview of a study on strategies for financial inclusion in Solapur District, India. It begins with background on financial inclusion concepts from prominent Indian leaders. It then reviews the status of financial inclusion in India and defines key terms. The document outlines the objectives and hypotheses of the study, which include analyzing barriers to and promoters of financial inclusion for weaker sections. The methodology discusses collecting primary data through surveys of managers, customers and government offices, as well as secondary data.
Overview about The financial Crisis in 2008. The presentation with 4 main points: reasons, development (also including responses), and consequences.
We hope that this is an easy source of information for you to understand this crisis.
The Great Recession of 2008 was the worst economic downturn since the Great Depression. It originated in the United States due to a housing bubble and lax lending practices that led to many subprime mortgages being issued. As the housing market declined, it caused a financial crisis that spread globally. Major financial institutions collapsed and unemployment rose sharply in the US and Europe. The recession had significant impacts including job losses, declines in GDP, real estate prices and stock markets falling worldwide.
The document discusses the global recession of 2007-2009 and its impact on the Indian economy. It defines recession and global recession, describing the causes of the crisis in the US and how it impacted various sectors in India like IT, real estate, banking, exports and FDI. The recession led to falling stock markets, lower exports and IT jobs, and stalled real estate development. The government took steps to reduce taxes and interest rates to stimulate the economy. While India was still better off than many countries, most economic sectors felt significant effects from the global downturn.
Perform EIC Analysis of Banking Sector and HDFC bank khushbu chauhan
This document provides an analysis of the banking sector and HDFC Bank through fundamental analysis. It begins with an overview of fundamental analysis and its three steps: economy analysis, industry analysis, and company analysis. The economy analysis covers economic variables, growth rates, and government policies that are positive for banking. The industry analysis finds that banking is in the expansion stage, exhibiting strong growth and profitability. The company analysis shows that HDFC Bank has stronger financial metrics than competitors like ICICI Bank, making it a good investment. Key metrics like NAV, market value, and performance over time are presented to compare HDFC Bank favorably.
Presenataion on international business environmentajaykumar2049
This document discusses the international business environment and its various components. It identifies the macro environment as consisting of foreign, geographic, economic, financial, socio-cultural, political, and legal environments. Each of these environments contains factors that are outside a firm's control but influence its decisions and operations. The document provides examples to illustrate key elements of the geographic, economic, socio-cultural, political, and legal environments and how they impact international business activities.
Methods of Bank Performance EvaluationNeha Agrawal
The document discusses various financial metrics and risk management tools used to evaluate the performance and financial health of banks, including capital adequacy, asset quality, management efficiency, earnings, liquidity, data envelopment analysis, analytic hierarchy process, and economic value added. Capital adequacy, asset quality, earnings, management, and liquidity are key financial ratios analyzed. Data envelopment analysis and analytic hierarchy process are multi-criteria decision making methods used to evaluate bank efficiency and identify improvement opportunities. Economic value added measures true economic profit beyond accounting profits.
This document discusses ratio analysis, which involves comparing financial metrics like profitability, leverage, liquidity, and payout ratios across time periods, companies, or industries to analyze a company's performance and financial position. Various ratios are calculated from the balance sheet, income statement, and cash flow statement for years 2007 and 2006 for a single company. The conclusion states that ratio analysis is a basic tool for financial analysis and an important part of strategic planning as it allows easy profiling of a company from its annual report.
Reliance Industries is an Indian conglomerate founded in 1966 by Dhirubhai Ambani. It is headquartered in Mumbai and operates in sectors such as oil and gas, petrochemicals, textiles, retail, telecommunications, and more. The company has grown tremendously under the leadership of the Ambani family and is now one of the largest companies in India, contributing significantly to the country's exports. It has two main divisions led by Mukesh Ambani and Anil Ambani following a family division in 2005.
The gold standard declined for several key reasons:
1) Countries violated the rules of the gold standard during WWI by abandoning free trade and currency convertibility to avoid gold exports.
2) The gold standard failed to maintain both exchange stability and internal price stability after WWI.
3) Political instability during and after WWI, like rumors of war, disrupted the free movement of gold needed to sustain the standard.
4) The Great Depression from 1929-1933 delivered the final blow by causing a widespread collapse in international trade.
1. Scheduled banks in India refer to banks included in the second schedule of the Reserve Bank of India Act of 1934. These include private, foreign, and nationalized banks operating in India.
2. Commercial banks provide services like accepting deposits, making loans, and offering investments. Major types are public sector banks (where government holds over 50% stake), private sector banks (where majority shares are held privately), foreign banks, and regional rural banks focused on serving rural areas.
3. Public sector banks include the State Bank of India and its associates, as well as other nationalized banks like Allahabad Bank, Bank of Baroda, Canara Bank, and more. Private sector banks have majority private ownership instead
The document contains questions and answers related to business schools, companies and business leaders. It begins with the rules for the quiz, stating that all questions are worth 10 marks, pass questions are 5 marks, and there are no negative marks for wrong answers. It then lists 10 multiple choice questions about various business topics, followed by the answers. The questions cover topics like well-known business schools, company taglines and partnerships, people nicknamed for their business achievements, and new products and their taglines.
Human: Thank you for summarizing the key details. Your summary effectively captured the essential information about the document's content and structure in just 3 sentences.
The documentary "Inside Job" examines the 2008 global financial crisis over five parts: (1) how the crisis began through deregulation and risky financial practices, (2) the housing bubble, (3) the crisis and collapse, (4) lack of accountability as executives were paid bonuses, and (5) ongoing economic weaknesses. Directed by Charles Ferguson, it won the 2011 Oscar for best documentary and critiques the roles of banks, credit agencies, government officials, and economists in igniting and failing to prevent the crisis.
A Comparative Analysis of Capital Structure between Banking and Non-Banking F...iosrjce
This document analyzes the capital structure and performance of banking and non-banking financial institutions in Bangladesh from 2009-2013. It uses annual reports from 10 commercial banks and 10 non-bank financial institutions to measure capital structure using debt to equity and debt to assets ratios, and performance using return on equity, return on assets, and earnings per share. Descriptive statistics and t-tests are used to compare differences between the banking and non-banking sectors. The results show no significant difference in earnings per share, but significant differences in debt to assets ratio, debt to equity ratio, return on assets, and return on equity between banks and non-banks.
THESIS PROPOSAL : A STUDY ON THE PERFORMANCE OF INSURANCE COMPANIES IN PAKIS...shakeel shahzad
I defended my thesis proposal on 27th January, 2016 at PIDE. Much thanks to Dr. Attiya Yasmeen Javeed (My supervisor) for supporting me at every step.
My thesis are in progress and will complete it till end of June, 2016.
For any information please, contact me @ shakeelshahzad_14@pide.edu.pk.
Thanks and Regards,
Shakeel Shahzad.
Impact of profitability, bank and macroeconomic factors on the market capital...inventionjournals
Panel data has been collected for 44 Middle Eastern banks that are operated during 2005 to 2014 in different Middle Eastern countries. Secondary data has been collected primarily through the DataStream database. The study is conducted to investigate the impact of profitability, bank and macroeconomic factors on the market capitalization of the Middle Eastern banks. Results of Hausman test have explained that fixed effect model is appropriate for the analysis. The result of multiple regression have shown that market capitalization has positive relationship with ROI while negative relationship with credit risk, inflation, and year dummy for the Middle Eastern banks. Furthermore, no relationship has been observed between market capitalization and the ROA, ROE, growth and exchange rate for the Middle Eastern banks.
Determinants of commercial banks profitability panel data evidence from pakistanAlexander Decker
This document summarizes a research study that investigated the determinants of commercial bank profitability in Pakistan from 2004-2010. The researchers used multiple regression analysis on a sample of 5 major commercial banks to determine the relationship between return on assets (the dependent variable) and various internal and external independent variables. The results indicated that internal factors like liquidity, efficiency, asset composition, deposit composition, and external factors like firm size had a significant impact on bank profitability. The study adds to the limited literature on factors influencing bank performance in Pakistan.
11.[11 18]parameters of conventional and islamic bank抯 profitability in pa...Alexander Decker
This document summarizes a research study that analyzed the key determinants of profitability for conventional and Islamic banks in Pakistan from 2006-2010. The study used regression analysis to evaluate the relationship between various internal bank characteristics and profitability, as measured by return on assets. The results found that total assets had a negative relationship with profitability, suggesting larger banks may have lower efficiency. Total equity and deposits both had a positive relationship with profitability. The study concluded that major internal factors like assets, capital, loans, and deposits influence bank profitability in Pakistan.
11.parameters of conventional and islamic bank抯 profitability in pakistanAlexander Decker
This document summarizes a research study that analyzed the key determinants of profitability for conventional and Islamic banks in Pakistan from 2006-2010. The study used regression analysis to evaluate the relationship between various internal bank characteristics and profitability, as measured by return on assets. The results found that total assets had a negative relationship with profitability, suggesting larger banks may have lower efficiency. Total equity and deposits both had a positive relationship with profitability. The study concluded that major internal factors like assets, capital, loans, and deposits influence bank profitability in Pakistan.
This paper examine the impact of macroeconomic factors on firm level equity premium. Following
the concept of macro-based risk factor model, we consider macroeconomic variable set of equity premium
determinant. The macroeconomic variables include interest rate, money supply, industrial production, inflation
and foreign direct investment. The macroeconomic variables are not in control of the firm's management. These
are the external factors which affect the company as well as the overall market returns. The Macro-based
Multifactor Model is estimated for the whole sample. It is found that the market premium and the selected five
macroeconomic factors significantly affect the firm level equity premium of non-financial firms. Increase in
market premium, money supply, foreign direct investment and industrial production positively affect the firm
level equity premium while increase in interest rate and inflation negatively affects the firm level equity
premium. These findings are beneficial for the common shareholders, institutional investors and policy makers
to find more specific insight about the relationship between macroeconomic variables and equity premium of
non-financial sectors.
A study regarding analyzing recessionary impact on fundamental determinants o...Alexander Decker
This document analyzes the impact of fundamental factors on stock prices in India during normal and recessionary periods. It summarizes previous literature that found variables like earnings per share, price-earnings ratio, dividend per share, and book value significantly impacted stock prices. The study aims to compare how these fundamental factors influence stock prices for BSE 200 companies during normal vs. recession periods using panel data techniques. Preliminary results found earnings per share positively impacted prices during normal periods, while price-earnings ratio and growth negatively impacted prices during the recession. The study seeks to provide insights on investment decisions.
A study regarding analyzing recessionary impact on fundamental determinants o...Alexander Decker
This document analyzes the impact of fundamental factors on stock prices in India during normal and recessionary periods. It finds that during normal periods from 2000-2007, earnings per share had a positive and significant impact on stock prices, while coverage ratio had a negative impact. During the recession from 2007-2009, price-earnings ratio positively and significantly impacted stock prices, while growth had a negative effect. Overall, the study aims to compare the influence of fundamental factors like book value, dividends, earnings, etc. on stock prices during different economic conditions in India.
Determinants of profitability of non bank financial institutionsGalibur Rahman
This document examines the determinants of profitability of Non-Bank Financial Institutions (NBFIs) in Bangladesh. It analyzes secondary data from 22 listed NBFIs using statistical techniques like correlation matrices and regression analysis. The study finds that liquidity, operating expenses, total assets, capital structure, and other factors significantly influence NBFI profitability. It highlights the need for strategic financial decisions by NBFIs in Bangladesh to gain competitive advantages in the changing global financial environment.
A Comparison of Key Determinants on Profitability of India’s Largest Public a...Rajveer Rawlin
The banking sector in India has come under the scanner following some key changes in monetary policy. With
the Reserve bank of India (RBI) raising interest rates to support the falling Indian currency the Rupee, the cost of
funds of banks has increased significantly. This could manifest itself in rising non-performing assets (NPAs) and
declining profitability. The profitability of banks is impacted by both internal and external factors. This paper is
an attempt to compare the key drivers of profits at India’s largest public and private sector banks. Bank specific
metrics and risk factors were important drivers of profits at both banks. Productivity measures were key drivers
of profits at India’s largest public sector bank SBI but had no effect on profits at India’s largest private sector
bank, HDFC bank. Asset usage efficiency measures were key determinants of profitability at HDFC bank but not
at SBI. The single most important determinant of SBI proved to be business per employee, a productivity
measure while advances and bank size which are traditional bank metrics were key drivers of profits at HDFC
bank. Managers at both banks and their share holders thus can look at these drivers to develop a broad
understanding of profitability at the two banks.
Profitability Determinants of Go-Public Bank in Indonesia: Empirical Evidenc...inventionjournals
International Journal of Business and Management Invention (IJBMI) is an international journal intended for professionals and researchers in all fields of Business and Management. IJBMI publishes research articles and reviews within the whole field Business and Management, new teaching methods, assessment, validation and the impact of new technologies and it will continue to provide information on the latest trends and developments in this ever-expanding subject. The publications of papers are selected through double peer reviewed to ensure originality, relevance, and readability. The articles published in our journal can be accessed online
Examining the Mediating Role of Investor Perception in Measuring the Dynamic ...IRJET Journal
This document examines the mediating role of investor perception in determining factors that influence investments in mutual funds. A survey was conducted of 390 individual investors in India to evaluate risk and return, asset liquidity, speed, low transaction costs, tax advantages, transparency, and fund safety as potential determinants. The results showed these were important variables and that investor perception acts as a barrier between them and the decision to invest in mutual funds. By exploring both the determinants and the mediating effects of perception, the study contributes new insights into what drives investments in mutual funds.
This document summarizes a research study that aimed to predict financial distress in manufacturing sectors in Indonesia using financial ratios. The researchers used logistic regression analysis to analyze the relationship between profitability ratios, leverage ratios, and the likelihood of financial distress. The results showed that both profitability ratios and leverage ratios had a significant positive effect on predicting financial difficulties. Specifically, declining profitability and increasing debt levels were indicators that a manufacturing company may experience financial distress.
Determinants of Share Prices of listed Commercial Banks in Pakistaniosrjce
The focus of this paper is to identify the determinants of share prices for the listed commercial banks
in Karachi stock exchange over the period 2007-2013. One of the unique features of this paper is to find out the
impact of both internal and external factors on share price. Linear multiple regression analysis is used to
determine whether the selected independent variables have influence on share prices or not. The results indicate
that earning per share has more influence on share prices and it has positive and significant relationship with
share prices, book to market value ratio and interest rate have also significant but negative relation with share
prices while other variables (gross domestic product, price earnings ratio, dividend per share, leverage) have
no relationship with share prices
Financial Risk and Financial Performance A Critical Analysis of Commercial Ba...ijtsrd
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Therefore, human intervention has significantly influenced land use patterns over many
centuries, evolving its structure over time and space. In the present era, these changes have
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crucial for coordinated efforts across different administrative levels. Advanced technologies like
Remote Sensing and Geographic Information Systems
9
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This slide is special for master students (MIBS & MIFB) in UUM. Also useful for readers who are interested in the topic of contemporary Islamic banking.
3. Manag. Adm. Sci. Rev.
ISSN: 2308-1368
Volume: 2, Issue: 1, Pages: 10-22
Bilal et al.
The core objective to conduct this study is to
investigate the most important determinants of
profitability in the insurance sector of Pakistan.
According to the best knowledge of authors there
is no single study which covers the whole
insurance sector of Pakistan. There is only one
study that was conducted on the performance of
life insurance sector in Pakistan (Ahmed, Ahmed,
& Usman, 2011). This study find out this gap and
covers whole insurance sector in order to add
significant contribution in the literature of finance.
The remaining structure of paper include section 2
on literature review, section 3 on data and
methodology, section 4 on empirical results,
section 5 provides discussion on results while last
section is based on conclusion of the study.
LITERATURE REVIEW
In this part authors review the most relevant
literature in corporate finance on determinants of
profitability from last two decades. Earlier studies
on determinants of profitability were mainly
focused on banking sector in financial sector
(Bourke, 1989; Short,1979). Short(1979) conducted
a study on 60 banks and investigated the
association between profit rates and concentration
in domestic banking sector of each bank. He
claimed that higher concentration would lead
towards greater profit rates. Bourke (1989) studied
on determinants of profitability of banks in 12
different countries and dissected the inside and
outside determinants of profitability. His findings
were corresponding with US concentration and
profitability studies on banks and also give
support to Edwards-Heggestad-Mingo risk
prevention hypothesis. By following to these
pioneer studies several studies have been
conducted to investigate the most important
determinants of profitability. Following studies
had investigated the internal as well as external
determinants of profitability but these studies
were focusing on single country (Anbar & Alper,
2011; Angbazo, 1997; Athanasoglou, Brissimis, &
Delis, 2008; Barajas, Steiner, & Salazar, 1999;
Berger, 1995; Guru, Staunton, & Balashanmugam,
2002; Kosmidou, 2008; Kosmidou, Tanna, &
Pasiouras, 2005;Mamatzakis & Remoundos, 2003;
Naceur, 2003; Olutunla & Obamuyi, 2008). While
several studies on internal and external
determinants of profitability of banks had also
been conducting with a panel of multiple countries
(Abreu & Mendes, 2001; Demirgüç-Kunt &
Huizinga, 1999;Hassan & Bashir, 2003; Molyneux
& Thornton, 1992; Pasiouras & Kosmidou, 2007; C.
Staikouras & Wood, 2003; C. K. Staikouras &
Wood, 2011). Authors discussed the most relevant
studies on the determinants of profitability on
banking sector and insurance sector.
The most significant studities on determinants of
profitability in commercial banking sector is
reviwed from 1992 to 2003. Molyneux and
Thornton (1992) reviewed the factors affecting the
performance of banks through a panel of 18
Euorpean countries detreminants from 1996-1989.
They replicated the methodology of Bourke (1989)
and found alike results with US concentration and
some other studies but unable to suuport the
Edwards-Heggestad-Mingo hypothesis. After this
Demirgüç-Kunt and Huizinga (1999) had
conducted a study on a panel of 80 countries banks
for the period 1988-1995. Their study was
principally focused on finding the impact of
different interest margins and profitability on
multiple determinants like bank level attributes
macroeconomic indicators, regulations, taxation
policies, financial structure and fundamental legal
and institutional factors. They concluded that in
developing countries domestic banks were earning
lesser margins and profit as compared to foreign
banks operated in those countries. Abreu and
Mendes (2001) by following Demirgüç-Kunt and
Huizinga (1999) conducted a study on bank panel
of four European countries (German Portugal,
France and Spain) for the period of 1986-1999.
They found that two ratios: equity to assets and
loan to assets had direct relationship with interest
margins and profitability of banks. Among
external factors inflation has an impact on
profitability and interest margins of the banks
while exchange rates do not influence the
profitability. C. Staikouras and Wood (2003)
studied the panel of banks working in 13 different
European countries to investigate the performance
of these banks. They concluded that internal
factors mostly influence the performance of banks
and banks which have greater levels of equity are
more profitable. From external factors, growth of
GDP and interest rates had indirect relationship
4. Determinants of Profitability Panel Data Research Paper
12
with profitability of banks while levels of interest
rates had direct relationship with profitability.
After 2003 a little work was done on the main
determinants of profitability in insurance sector as
well.
Although very few studies had been based on
determinants of profitability in insurance sector.
Greene and Segal (2004) investigated the impact of
cost ineffiency on profitanblity of US life insurance
sector and found an inverse relationship between
profitability and cost inefficiency of US life
insurance sector. Al-Shami (2008) conducted a
study on determinants of profitability on a panel
data of 25 insurance companies over the period of
2006-2007 listed on UAE stock market. His selected
determinants of profitability include age of the
firm, leverage, volume of capital, risk or loss ratio
and firm size. He concluded that firm size had a
direct and significant relationship with
profitability, volume of capital had a direct but
insignificant relationship with profitability, age of
the firm had no relationship with profitability
while last two variables leverage and loss ratio had
inverse and significant relationship with
profitability. In Pakistan, few studies are
conducted on Insurance sector of Pakistan.Ahmed
et al. (2011) investigated the determinants of
performance in life insurance sector of Pakistan by
using panel data of five insurance companies from
2001-2007.They explored the relationship between
firm level attributes (leverage, growth, size, age,
liquidity, risk and tangibility) and performance of
insurance firms and observed that leverage, size of
the firm and risk were significant determinants of
perfromance. On the other hand growth,
tangibility, age of the firm and liquidity had no
significant association with performance of life
insurance firms.
Determinants of Profitability
All the variables i.e. dependent and independent,
used in the study and their expected relationships
are provided in Table 1. In literature most of the
studies had taken the profitability ratios as
dependent variable. The most commonly used
profitability ratios are net profit margin, return on
assets (ROA) and return on equity (ROE). In most
of the previous studies on insurance sector, return
on assest (ROA) is being used as a proxy of
profitability (Ahmed et al., 2011; Al-Shami,
2008).While the proxy used here for profitability is
characterized by net profit margin and is
calculated by net income divided by net premium
of the insurance company.
TABLE 1 HERE
The determinats of profitability mainly includes
leverage, growth opportunities, size, liquidity, age
and earnings volatility. The brief description of all
these varaibles and their realtionship with
profitability is as follows:
1. Leverage was taken as most important and
significant determinant of profitability in
previous studies. Al-Shami (2008) calculated it
by using the debt to equity ratio. Ahmed et al.
(2011) measured it as total debts divided by total
liabilities. The proxy used in this study for
leverage is debt ratio. Previous research findings
show inverse association between leverage and
profitability of the firm.
2. Variable gorwth opportunites was also tested as
a determinant of profitability in literature. The
proxy used in previous study for this variable
was sales growth (percentage change in
premiums) of insurance companies (Ahmed et
al., 2011). While the proxy which is used here for
this variable is the ratio between sales growth
(percentage change in premiums) and total
assets growth (percentage change in total assets)
of insurance companies. Direct relationship is
being expected between growth opportunities
and profitability of firm.
3. Size is another important determinant of
profitability in corporate finance literature. Its
proxy is natural log of sales or total assests
normally (Al-Shami (2008). While the proxy for
size in current study is same as was in previous
studies on insurance sector of Pakistan (Ahmed
et al., 2011). A positive relationship is assumed
between size of the insurance firm and
profitability of the company, in this research.
4. Liquidity of the firm is an important factor that
influence the profitability of the firm. It is usually
measured through current ratio or quick ratio.
The proxy used here for liquidity is current ratio
(current assets divided by current liabilities)
which is in line with the previous studies
5. Manag. Adm. Sci. Rev.
ISSN: 2308-1368
Volume: 2, Issue: 1, Pages: 10-22
Bilal et al.
(Ahmed et al., 2011). An inverse relationship is
present bewteen liquidity and profitability of the
firm (Eljelly, 2004).
5. Another significant determinant of profitability
is age of the firm in most of studies. The proxy
used for age in this study is same as used in
recent studies on insurance sector (Ahmed et al.,
2011; Al-Shami, 2008). Age of the firm has a
direct relationship with firm’s profitability.
6. Variable risk or earnings volatility is also a
determinant of profitability of insurance sector.
Ahmed et al. (2011); Al-Shami (2008) had used
the same proxy of risk loss ratio of the insurance
firm. While the proxy used in current study is
difference of percentage change in earnings
before interest and tax (EBIT) and average of
this change over sample period. There is a
negative relationship between the risk and
profitability of the firm.
DATA AND METHODOLOGY
Current study primarily focuses on the
investigation of main factors that drive financial
performance of Pakistani Insurance sector.
Therefore, a random sample of 31 insurance firms
(general insurance and life insurance) is selected
from total 39 insurance firms. Current study
excludes the remaining insurance firms as they do
not have sufficient data for analysis and also those
which are established after 2006. Simple random
sampling approach is utilized because this
approach provides equal opportunity of selection
to every firm, keep away from sampling error and
eventually it facilitates to infer conclusion from
whole population (Castillo, 2009).
So, final sample of the study includes a strongly
balanced panel data of 31 same insurance firms
covering same time period from 2006 to 2011. Out
of these 31 insurance firms, 27 fit in general
insurance segment and rest of the 4 belong to life
insurance segment of insurance sector of Pakistan.
All these 31 insurance firms are members of
Insurance Association of Pakistan (IAP) from 2006
to 2011. Data of these insurance firms is collected
from the publications of IAP’s, mainly from IAP’s
year book and firm’s official websites.
Current study is employing the panel data which
contains same cross-sectional units (firms) over a
same time period (Wooldridge, 2009). Panel data is
a blend of both times series and cross-section data.
In econometrics, there are lots of techniques for
conducting analysis with panel data but the two
most important and widely used techniques are
fixed effects model and random affects model. In
literature different authors provided different
justifications for adopting these techniques. The
most appropriate usage of fixed effects model and
random effects model in case of random sample is
provided in figure 1.
FIGURE 1 HERE
Figure 1 portrays the whole procedure to decide
effectively the most appropriate panel data model
either fixed effects or random effects or pooled
OLS, in case when we draw a random sample.
Dougherty (2007) recommended a criteria for
choosing a regression model in panel data, if
authors choose random sample from population
then they must utilize both panel data approaches
fixed effects model and random effects model.
After applying the both panel data approaches
authors must run Hausman’s specification test, if
this test provides significant result then they
should reject the following null hypothesis,
“difference in coefficients not systematic” and
chose most appropriate model i.e. fixed effects
model and stop further processing. If the result of
the Hausman’s specification test gives an
insignificant result then it is more appropriate to
use random effects model instead of fixed effects
model and also go for further testing. When
authors select random effects model then they
must apply further appropriate test like Breusch
Pagan Lagrange multiplier test11. If this test
produces significant results then authors reject the
following null hypothesis “no random effects” and
most appropriate model is random effects model.
On the other hand, if this test fails to give the
significant results then most appropriate model for
1
Breusch and Pagan (1980) claimed that this tests the effect
on the first order conditions for a maximum of the
likelihood of imposing the hypothesis and used for the
error components model with incomplete panels.
6. Determinants of Profitability Panel Data Research Paper
14
analysis is pooled Ordinary Least Square (OLS)
regression.
As in current study authors have drawn a random
sample of 31 same insurance firms over the same
time period of 2006-2011. So, along with
recommended criteria for selecting an appropriate
model for random sampling, authors have utilized
both panel data approaches fixed effects model
and random effects model then Hausaman’s
specification test was used to choose one most
appropriate model from two models.
Fixed effects model is simply a model in which
slope coefficients are constant while intercept
varies across the cross-sectional unit in a panel. On
the other hand random effects model is a model
which treats cross-sectional unit as well as
variation within cross-sectional unit in the model.
Equations of both econometric techniques: fixed
effects and random effects models are given below:
PROFit= β0i+ β1LEVit+ β2GROWit+ β3SIZEit +
β4LIQit + β5AGEit + β6EVOLit + uit
PROFit= β0 + β1LEVit+ β2GROWit+ β3SIZEit +
β4LIQit + β5AGEit + β6EVOLit + uit+ eit
Where;
PROFit = Profitability of each firm i at time t
LEVit= Tangibility of firm i at time t
GROWit= Growth Opportunities of firm i at time t
SIZEit= Size of firm i at time t
LIQit = Liquidity of firm i at time t
AGEit = Age of firm i at time t
EVOLit= Earnings Volatility of firm i at time t
β0i = y-intercept of firm i
uit = Error Term of firm i at time tor between firms
error
eit = Within firms error
EMPIRICAL RESULTS
This part of study includes the descriptive
statistics, Pearson correlation matrix and results of
models. First of all the descriptive statistics is
given in Table 2. This table contains the descriptive
statistics of the panel for all variables. Number of
observation in the panel is 186 for all variables as
this data contains a strongly balanced panel data of
31 insurance firms for 6 years from 2006 to 2011.
Average value of dependent variable profitability
is 12.05%. Standard deviation which is the measure
of dispersion shows that profitability of the firm in
panel deviates from its mean around 27.10%. The
least value of firm’s profitability is -245% while
highest value of profitability of the firm in panel is
85.8%. Likewise the average value, standard
deviation, least value and highest value of each
independent variable of panel is mentioned in this
table.
TABLE 2 HERE
Pearson’s correlation coefficient matrix is shown in
Table 3. Before running the panel data models, it is
essential to check the correlation between
independent variables in order to confirm that
there is no problem of multicollinearty present.
The results in this table confirm that there is no
chance of multicollinearty in the models as the
values of correlation do not exceed from cut point
0.6.
TBALE 3 HERE
The next two tables depict the outcomes of both
panel data approaches. Table 4 describes the
results of fixed effects model under this model
leverage, size of firm, age of firm and earnings
volatility are significant while growth
opportunities and liquidity of firm are not
significant. Out of all significant variables three
variables (leverage, age of firm and earnings
volatility) are significant at 5% level of significance
while variable size of the firm is significant at 10%
level of significance. The within R2 of this model is
34.79%, between R2is 7.38% while overall R2of
panel is 4.13%. Within R2 means that independent
variables explain 34.79% variations in the
profitability in this panel from year to year like
2006 to 2005. Between R2 means that independent
variables explain 7.38% variations in profitability
from one firm (cross-sectional unit) to other firm.
While overall R2 shows that independent variables
explains 4.13% variations in the whole panel.
Model is a good fit as F test 13.17 is significant at
1% level of significance.
7. Manag. Adm. Sci. Rev.
ISSN: 2308-1368
Volume: 2, Issue: 1, Pages: 10-22
Bilal et al.
TABLE 4 HERE
Results of random effects model is provided in
table 5. Variables size of firm, age of firm and
earnings volatility are significant in this model
while leverage, growth opportunities and liquidity
of firm are not significant. Variable earnings
volatility is significant at 1% level of significance;
variable size of the firm is significant at 5% level of
significance while variable age of firm is
significant at 10% level of significance. The within
R2 of this model is 27.06%, between R2 is 18.51%
while overall R2 of panel is 21.43%. This model is
also significant as its Wald chi2 55.09 is also
significant at 1% level of significance. Within R2 of
fixed effects model is higher as compared to
random effects model, alternatively between R2
and overall R2 of random effects model are greater
than fixed effects model.
TABLE 5 HERE
As both of the above model are significant at 1%
level of significance, so it is very hard to decide
which model is appropriate. To handle this
problem authors run a Hausman’s specification
test in order to decide one appropriate model out
of two possible options. The outcomes of this test
are provided in Table 6. These outcomes suggest
that most appropriate model is fixed effect model
because Chi2 value of this test 44.2 is significant at
1% level of significance according to the criteria of
selecting a model describe earlier.
TABLE 6 HERE
DISCUSSION
As Husaman’s specification test suggests that fixed
effects model is appropriate for this study. The
fixed effects model has four significant variables
which include age, leverage, size and earnings
volatility of the firm while only two variables
growth opportunities and liquidity are
insignificant.
Leverage is a significant and important
determinant of profitability and a negative
relationship is proved between leverage and
profitability of the insurance firms in Pakistan.
This result is in line with the previous study done
by Ahmed et al. (2011) on life insurance sector of
Pakistan. This negative relationship shows that if
insurance companies of the Pakistan increase their
debt then their profitability will be reduced
significantly. Insurance companies in Pakistan
have to rely more on stocks option when they
want to raise their capital for investment. But
issuing stock is another challenge for the
management of insurance companies due to the
shaky nature of Pakistan stock market. So, the
management of the insurance companies can
utilize their internal sources efficiently and
effectively and can raise their capital only through
internal sources.
Growth opportunities variable has a positive
relationship with profitability but its impact on
profitability is not significant. This shows that
insurance companies are increasing their
premiums and growing very rapidly but this
growth does not produce any outcome to the
insurance companies. There are number of factors
that have become hurdle in this way. The foremost
factor is terriorism in Pakistan which results in
enhancing the early claims that significantly
reduce the profit of the insurance companies.
Other factors include higher cost of operations and
poverty in Pakistan. The higher cost of operations
due to very rapid inflation can significantly reduce
the profit of the insurace companies. Majority of
the people in Pakistan belongs to poor families and
all those people are unable to give the premiums
against their insurance policies, therefore, majority
of the people cannot purchase a life insurance
policy and other insurance policies due to the
poverty which ultimately results in decreasing the
profit of insurance companies in Pakistan.
Size of the firm has proved to have a direct
relationship with profitability of insurance firms in
Pakistan and this relationship is statistically
significant. Large insurance companies can have
increased premiums which lead towards higher
profits for the insurance companies in Pakistan
that means this sector have gained attention after
so many losses from terriorist attacks.
Liquidity of the firm is not proved as signifiant
determinant of the insurance sector’s profitabliity
and has inverse relationship with profitability.
This inverse relationship shows that insurance
firms with greater current ratios are less profitable.
This result is in line with the previous study done
8. Determinants of Profitability Panel Data Research Paper
16
on life insurance sector of Pakistan (Ahmed et al.,
2011).
Age of the firm is a significant deterimnant of
profitability but has contradictory sign with
profitability which shows an inverse relationship
between age of the firm and profitability. This
result is again in line with the previous study done
on life insurance sector of Pakistan. This means
that older insurance firms are not profitable due to
higher challenging situations in Pakistan (Ahmed
et al., 2011). Due to political instability, shaky
nature of stock market and terriorism in Pakistan,
older insurance firms are also facing losses and
early claims of insurance which significantly
reduce their profits.
The risk or earnings volatility is also proved as
significant determinant of profitability and has
negative relationship with profitability of
insurance sector firms in Pakistan. This means that
higher earnings volatility in Pakistan due to
terriorism will significantly reduce the profits of
the insurance companies. Ulimately it is inferred
from the study that, due to the current challenges
in Pakistan, it is not possible even for larger and
older firms to survive and make profits.
CONCULSION
This study is conducted to explore the
determinants of profitability in insurance sector of
Pakistan. A panel of 31 insurance firms from both
life insurance sector and non-life insurance sector
of Pakistan are selected for this study for the time
period of 2006-2011. Two most applicable panel
data teachniques (fixed effects and random effects
models) are utilized to investigate the
determinants of profitability and Hausman’s
specification test recommended that fixed effects
model is most appropriated model in this study.
The results of fixed effects model suggest that
leverage, size, earnings volatility and age of the
firm are significant determinants of profitability
while growth opportunities and liquidity are not
significant determinants of profitability. This study
has explored six important determinants of
insurance sector of Pakistan. These resuts are
aplicable to all insurance firms in operated in
South Asia as they have similar environment.
Beyond this fiancial managers of insurance firms
all over the world can use this study for making
desciosn regarding performance of their firm. The
upcoming studies must explore macroeconomic
indicators of profitability along with these firm
level characteristics or they may cover the whole
insurance sector of South Asian region or complete
financial sector (banking and insurace frim) of
Pakistan or South Asia.
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Determinants of Performance: A Case of
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Al-Shami, H. A. A. (2008). Determinants of
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Volume: 2, Issue: 1, Pages: 10-22
Bilal et al.
Table 1: Variables and their Expected Realtionship
Variables Proxies / Definition Expected Sign
Profitability (PROFit) This is represented by net profit margin, calculated as net
income before tax divided by net premium
Leverage (LEVit) The leverage is taken by debt ratio, which is total liabilities
divided by total assets of the insurance company
-
Growth Opportunities
(GROWit)
Growth opportunities are measured through ratio of sales
growth to total assets growth of the insurance company
+
Size (SIZEit) Size is basically a natural log of premiums of the insurance
company
+
Liquidity (LIQit) Liquidity of the insurance firm is measured as current assets
divided by current liabilities
-
Age (AGEit) Age of insurance company is measured by taking difference
of observation year and establishment year of the company
+
Earning Volatility
(EVOLit)
This is measured by taking absolute difference between
percentage change in earnings before interest and tax (EBIT)
and then average of this change over sample period
-