engleski

Dynamic Panel Analysis of B&H Insurance Companies’ Profitability

A company’s profitability has always attracted the attention of academics, policy makers and practitioners interested in revealing the main factors that determine business success. Although profitability has been widely investigated in manufacturing industries, far less attention has been paid to it in the financial sector. This is specially truth for the insurance companies. Accordingly, the aim of this paper was to investigate the factors that influenced insurance companies’ profitability in the Bosnia and Herzegovina (B&H) during the period from 2005 to 2010. Furthermore, having in mind that researches of this kind were much less prevalent in developing than developed countries, additional intention was to provide further insight into the impact of different variables on insurers’ performance in a developing country. Results of the conducted dynamic panel analysis revealed negative and significant influence of claims ratio on profitability ; and significant positive influence of age, market share and past performance on current profitability. Additionally, foreign owned firms performed better than domestically owned, while the level of the insurers’ diversification had no significant role in determining the profitability.

profitability; insurance; Bosnia and Herzegovina; developing country

nije evidentirano