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Risk, technical efficiency and capital requirements of Ghanaian insurers

Author

Listed:
  • Daniel Attah-Kyei

    (University of Ghana)

  • Charles Andoh

    (University of Ghana)

  • Saint Kuttu

    (University of Ghana)

Abstract

This paper evaluates the effect of recapitalisation on technical efficiency and risk of life and non-life insurers in Ghana. The study uses balanced panel data for 14 life and 17 non-life insurers from 2008 to 2019. Technical efficiency is computed using Data Envelopment Analysis. A generalised least square estimation technique is used to determine the relationship between recapitalisation and technical efficiency and between recapitalisation and insurers’ risk. The empirical results show that recapitalisation has a significant positive effect on technical efficiency and a significant negative effect on the insurer’s risk. The findings also suggest that recapitalisation significantly mitigates risks and improves efficiency. The findings further provide insight into technical efficiency, regulation, and risk of insurance companies in Ghana.

Suggested Citation

  • Daniel Attah-Kyei & Charles Andoh & Saint Kuttu, 2023. "Risk, technical efficiency and capital requirements of Ghanaian insurers," Risk Management, Palgrave Macmillan, vol. 25(4), pages 1-27, December.
    • Handle: RePEc:pal:risman:v:25:y:2023:i:4:d:10.1057_s41283-023-00127-z
    DOI: 10.1057/s41283-023-00127-z
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    More about this item

    Keywords

    Insurer's risk; Recapitalisation; Regulation; Technical efficiency;
    All these keywords.

    JEL classification:

    • G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies; Actuarial Studies
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty

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