FINANCIAL STABILITY OF INSURANCE COMPANIES UNDER COVID-19 PANDEMIC: EVIDENCE FROM MENA COUNTRIES
| dc.contributor.author | Hammam Azzam Mustafa | |
| dc.date.accessioned | 2024-06-09T19:54:38Z | |
| dc.date.available | 2024-06-09T19:54:38Z | |
| dc.date.issued | 2022-12-28 | |
| dc.description.abstract | Abstract This thesis examined how the determinants of financial stability of insurance companies (ICs) have been influenced by COVID-19 in MENA countries. The study administered a two-step system-GMM to a sample of 78 insurance companies in eight MENA countries in the pre-COVID-19 from second quarter of 2018 to the fourth quarter of 2019 and during the COVID-19 from the second quarter of 2020 to fourth quarter of 2021. The macro and micro level determinants of financial stability were estimated. These variables were identified following the theories and literature related to financial stability and COVID-19 pandemic. Inflation was taken as a proxy for macroeconomic instability, whereas receivables, reinsurance dependence, invested assets ratio, firm size, change in the gross written premium, loss ratio, insurance leverage ratio, retention ratio and market concentration were the firm specific-factors. The Z-score was used as a proxy for the financial stability. During the COVID-19 pandemic period, a significant positive impact of inflation on financial stability was observed. However, the pre-COVID-19 period results showed no impact of inflation on financial stability. Concerning firm-specific variables, during COVID-19 pandemic period, the results showed that financial stability was impacted positively by firm size and negatively by loss ratio. Nevertheless, the results revealed that the receivables, reinsurance dependence, invested assets ratio, change in the gross written premium, age, insurance leverage ratio, retention ratio and market concentration had no significant effect on ICs’ financial stability. The pre-COVID-19 period outcomes showed that firm-specific variables yielded mixed results while there was a positive impact of the retention ratio and market concentration on FS. The insurance leverage, however, had a negative effect on FS. Furthermore, the results showed that the remaining variables were insignificant, including receivables, reinsurance dependence, change in the gross written premium, loss ratio, firm size and firm age. In the end, and contrary to expectations, the COVID-19 pandemic had a positive effect on the financial stability of ICs in the MENA region. The financial stability of insurance companies contributed to the overall financial stability at the macro-level, with a forward-looking view of appropriate policies to enhance the financial stability of these insurance companies during crises and pandemics. In addition, the study results assisted in understanding the actual impacts of COVID-19 with other firm-specific factors and macroeconomic factors on the overall financial stability of the economy. Based on the study findings, the researcher recommends that, for a healthy, sound and stable insurance sector, insurance industry regulators and supervisory authorities actively monitor the financial stability predictors during the COVID-19 pandemic, and utilize them to circumvent the effect of future pandemics and crises. Future studies are encouraged to use other proxies that capture the severity of the pandemic, such as the number of cases and deaths. In addition, researchers should focus on each country in the MENA region to find out how environmental factors affected FS during the COVID-19 pandemic. The researcher also suggests that more research should be carried on the effects of vaccinations and recent crises (such as the shipping crisis) on the financial stability of insurance companies and the overall economy. Keywords: Financial stability; Z-score, MENA Region; COVID-19; insurance companies, GMM. | |
| dc.identifier.uri | https://hdl.handle.net/20.500.11888/19065 | |
| dc.language.iso | en | |
| dc.supervisor | Dr. Muiz Abu Alia Dr. Ghassan Daas | |
| dc.title | FINANCIAL STABILITY OF INSURANCE COMPANIES UNDER COVID-19 PANDEMIC: EVIDENCE FROM MENA COUNTRIES | |
| dc.type | Thesis |