IDEAS home Printed from https://ideas.repec.org/a/bdu/ojijfa/v10y2025i2p43-60id3339.html
   My bibliography  Save this article

Equity Investments and Financial Performance of Insurance Companies in Kenya

Author

Listed:
  • Sylvia Ndunge Mutia
  • David Agong’
  • Isaac Linus Ochieng’

Abstract

Purpose: Insurance firms are financial institutions that are important to the effective deployment of capital as well as the mobilization of contractual savings. The funds that insurance companies raise for their investments comes from insurance premiums. To optimize the utility of the assets they invest in, it is necessary to create a methodical and logical way of assessing investment alternatives. Nonetheless, a number of factors influence investment alternatives. The study sought to establish the effects of equity investment on financial performance of insurance companies in Kenya. Methodology: The study applied causal research design in all the 55 insurance firms in Kenya. Census study was conducted for a period of 10 years between 2014 and 2023.Secondary data from IRA publications as well as the companies’ websites. Panel regression analysis correlation analysis and diagnostic tests were employed to analyze data and test the hypothesis. Findings: From the results, equity investment revealed beta values of 0.50041 and p-value 0.000, Panel regression results revealed a positive and significant effect between equity investment and financial performance of insurance firms in Kenya. Unique Contribution to Theory, Practice and Policy: Based on the findings and conclusions, the study recommended that insurance companies to think about investing in other developing nations with thriving capital markets in order to increase their financial performance. By doing this, the companies will be able to take advantage of market possibilities and reduce their vulnerability to shifts in local markets. The recommendations of the study to the Capital Markets Authority was to rely on the findings of the study when developing benchmark guidelines on the minimum holding on various investment alternatives and to develop new policies to guide the assets management within the insurance industry to ensure that public funds are well-protected and the firms achieve value on their returns.

Suggested Citation

  • Sylvia Ndunge Mutia & David Agong’ & Isaac Linus Ochieng’, 2025. "Equity Investments and Financial Performance of Insurance Companies in Kenya," International Journal of Finance and Accounting, IPRJB, vol. 10(2), pages 43-60.
    • Handle: RePEc:bdu:ojijfa:v:10:y:2025:i:2:p:43-60:id:3339
    as

    Download full text from publisher

    File URL: https://iprjb.org/journals/index.php/IJFA/article/view/3339
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Augustine Addo & Fidelis Sunzuoye, 2013. "The Impact of Treasury Bill Rate and Interest Rate On The Stock Market Returns: Case Of Ghana Stock Exchange," European Journal of Business and Economics, Central Bohemia University, vol. 8(2), pages 3781:8-3781, July.
    2. Harry Markowitz, 1952. "Portfolio Selection," Journal of Finance, American Finance Association, vol. 7(1), pages 77-91, March.
    3. Kamanda Morara & Athenia Bongani Sibindi, 2021. "Determinants of Financial Performance of Insurance Companies: Empirical Evidence Using Kenyan Data," JRFM, MDPI, vol. 14(12), pages 1-13, November.
    4. Segun Thompson Bolarinwa & Olufemi Bodunde Obembe, 2019. "Firm Size–Profitability Nexus: An Empirical Evidence from Nigerian Listed Financial Firms," Global Business Review, International Management Institute, vol. 20(5), pages 1109-1121, October.
    5. Donald A. Otieno & Rose W. Ngugi & Nelson H. W. Wawire, 2017. "Effects of Interest Rate on Stock Market Returns in Kenya," International Journal of Economics and Finance, Canadian Center of Science and Education, vol. 9(8), pages 40-50, August.
    6. Focarelli, Dario, 2017. "Why Insurance Regulation is Crucial for Long-term Investment and Economic Growth," LEAP Working Papers 2017/1, Luiss Institute for European Analysis and Policy.
    7. Dang, Thuy Duong & Hollstein, Fabian & Prokopczuk, Marcel, 2022. "How do corporate bond investors measure performance? Evidence from mutual fund flows," Journal of Banking & Finance, Elsevier, vol. 142(C).
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Akosah, Nana Kwame & Alagidede, Imhotep Paul & Schaling, Eric, 2020. "Testing for asymmetry in monetary policy rule for small-open developing economies: Multiscale Bayesian quantile evidence from Ghana," The Journal of Economic Asymmetries, Elsevier, vol. 22(C).
    2. Cui, Xueting & Zhu, Shushang & Sun, Xiaoling & Li, Duan, 2013. "Nonlinear portfolio selection using approximate parametric Value-at-Risk," Journal of Banking & Finance, Elsevier, vol. 37(6), pages 2124-2139.
    3. Pichler, Anton & Poledna, Sebastian & Thurner, Stefan, 2021. "Systemic risk-efficient asset allocations: Minimization of systemic risk as a network optimization problem," Journal of Financial Stability, Elsevier, vol. 52(C).
    4. Peter A. Abken & Milind M. Shrikhande, 1997. "The role of currency derivatives in internationally diversified portfolios," Economic Review, Federal Reserve Bank of Atlanta, vol. 82(Q 3), pages 34-59.
    5. Dhanya Jothimani & Ravi Shankar & Surendra S. Yadav, 2018. "A Big data analytical framework for portfolio optimization," Papers 1811.07188, arXiv.org, revised Nov 2018.
    6. Leonard J. Mirman & Egas M. Salgueiro & Marc Santugini, 2013. "Integrating Real and Financial Decisions of the Firm," Cahiers de recherche 1333, CIRPEE.
    7. Dominique Guégan & Wayne Tarrant, 2012. "On the necessity of five risk measures," Annals of Finance, Springer, vol. 8(4), pages 533-552, November.
    8. Andriosopoulos, Kostas & Nomikos, Nikos, 2014. "Performance replication of the Spot Energy Index with optimal equity portfolio selection: Evidence from the UK, US and Brazilian markets," European Journal of Operational Research, Elsevier, vol. 234(2), pages 571-582.
    9. Raffestin, Louis, 2014. "Diversification and systemic risk," Journal of Banking & Finance, Elsevier, vol. 46(C), pages 85-106.
    10. Sridhar, Shrihari & Naik, Prasad A. & Kelkar, Ajay, 2017. "Metrics unreliability and marketing overspending," International Journal of Research in Marketing, Elsevier, vol. 34(4), pages 761-779.
    11. Vithayasrichareon, Peerapat & MacGill, Iain F., 2013. "Assessing the value of wind generation in future carbon constrained electricity industries," Energy Policy, Elsevier, vol. 53(C), pages 400-412.
    12. Gruber, Lutz F. & West, Mike, 2017. "Bayesian online variable selection and scalable multivariate volatility forecasting in simultaneous graphical dynamic linear models," Econometrics and Statistics, Elsevier, vol. 3(C), pages 3-22.
    13. repec:dau:papers:123456789/2256 is not listed on IDEAS
    14. Gupta, Pankaj & Mittal, Garima & Mehlawat, Mukesh Kumar, 2013. "Expected value multiobjective portfolio rebalancing model with fuzzy parameters," Insurance: Mathematics and Economics, Elsevier, vol. 52(2), pages 190-203.
    15. Ke Zhou & Jiangjun Gao & Duan Li & Xiangyu Cui, 2017. "Dynamic mean–VaR portfolio selection in continuous time," Quantitative Finance, Taylor & Francis Journals, vol. 17(10), pages 1631-1643, October.
    16. Sanchez-Romero, Miguel, 2006. "“Demand for Private Annuities and Social Security: Consequences to Individual Wealth”," Working Papers in Economic Theory 2006/07, Universidad Autónoma de Madrid (Spain), Department of Economic Analysis (Economic Theory and Economic History).
    17. Muhinyuza, Stanislas & Bodnar, Taras & Lindholm, Mathias, 2020. "A test on the location of the tangency portfolio on the set of feasible portfolios," Applied Mathematics and Computation, Elsevier, vol. 386(C).
    18. Hany Shawky & Ronald Forbes & Alan Frankle, 1983. "Liquidity Services and Capital Market Equilibrium: The Case for Money Market Mutual Funds," Journal of Financial Research, Southern Finance Association;Southwestern Finance Association, vol. 6(2), pages 141-152, June.
    19. Colin Atkinson & Emmeline Storey, 2010. "Building an Optimal Portfolio in Discrete Time in the Presence of Transaction Costs," Applied Mathematical Finance, Taylor & Francis Journals, vol. 17(4), pages 323-357.
    20. Malavasi, Matteo & Ortobelli Lozza, Sergio & Trück, Stefan, 2021. "Second order of stochastic dominance efficiency vs mean variance efficiency," European Journal of Operational Research, Elsevier, vol. 290(3), pages 1192-1206.
    21. Giovanni Bonaccolto & Massimiliano Caporin & Sandra Paterlini, 2018. "Asset allocation strategies based on penalized quantile regression," Computational Management Science, Springer, vol. 15(1), pages 1-32, January.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bdu:ojijfa:v:10:y:2025:i:2:p:43-60:id:3339. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chief Editor (email available below). General contact details of provider: https://iprjb.org/journals/index.php/IJFA/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.