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Risk behaviour and insurance efficiency: the role of ownership and regulations from an emerging economies

Author

Listed:
  • Daniel Ofori-Sasu

    (University of Ghana Business School
    Central University)

  • John Kuwornu

    (Asian Institute of Technology)

  • Gloria Clarissa Dzeha

    (Central University)

  • Baah Aye Kusi

    (University of Ghana Business School)

Abstract

The paper examines the effect of risk-taking behaviours, ownership and regulations on insurance efficiency. The study uses the robust 2-stage Simar and Wilson simultaneous truncated regression for 40 Ghanaian insurance firms over 2008–2017 period. First, it provides evidence that insurance risk-taking behaviours reduce insurance efficiency. It found that regulations complement insurance ownership in explaining insurers’ efficiency. Finally, it shows that insurance ownership and regulations are important in reducing the negative impact of risk-taking behaviours on insurance efficiency in the long run. The policy implication is that shareholders should align their interest with managers by designing effective complementarity framework between ownership structures and risk-taking behaviours to yield an optimal insurance efficiency. Regulators should provide regulatory frameworks that align with the interest of inside ownership of insurers to provide effective risk management that generate optimal insurance efficiency.

Suggested Citation

  • Daniel Ofori-Sasu & John Kuwornu & Gloria Clarissa Dzeha & Baah Aye Kusi, 2022. "Risk behaviour and insurance efficiency: the role of ownership and regulations from an emerging economies," SN Business & Economics, Springer, vol. 2(7), pages 1-30, July.
    • Handle: RePEc:spr:snbeco:v:2:y:2022:i:7:d:10.1007_s43546-022-00254-x
    DOI: 10.1007/s43546-022-00254-x
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    More about this item

    Keywords

    Insurance efficiency; Regulations; Risk-taking behaviours; Insurance ownership;
    All these keywords.

    JEL classification:

    • G2 - Financial Economics - - Financial Institutions and Services
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies; Actuarial Studies
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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