FACTORS INFLUENCING CAPITAL ADEQUACY IN BUSINESS ORGANIZATIONS: A CASE OF KENYA’S INSURANCE INDUSTRY

2017 ◽  
Vol 2 (4) ◽  
pp. 1
Author(s):  
Lewis Wanja Jane ◽  
Dr. Aloys B. Ayako ◽  
Mr. William Kinai
Keyword(s):  
Regression Analysis ◽  
Insurance Industry ◽  
Calculated Data ◽  
Capital Requirements ◽  
Capital Adequacy ◽  
Insurance Companies ◽  
Unique Contribution ◽  
Analysis Model ◽  
Factors Influencing ◽  
Beta Coefficient

AbstractPurpose: The purpose of this study was to determine the factors influencing capital adequacy in business organizations.Methodology: A case study design was. The study consisted of 46 insurance companies. The data is quantitative and secondary data collection method was used. The study used descriptive and regression approach in data analysis. Using Statistical Package for Social Sciences (SPSS) regression analysis model was calculated. Data was presented in tables and graphs.Results: Regression analysis showed that ownership listing status had a beta coefficient of (-16.614) and that it was statistically insignificant (0.329). Regression analysis showed that dividend payout ratio had a beta coefficient of -0.455 and that it was statistically significant (0.000). Regression analysis showed that the profitability ratio had a beta coefficient of 0.485 and that it was statistically significant (0.000). Regression analysis showed that the liquidity ratio had a beta coefficient of 0.226 and that it was statistically significant (0.000). Regression analysis showed that the cost of capital had a beta coefficient of -0.566 and that it was statistically insignificant (0.125).Unique contribution to theory, practice and policy: The study recommended that insurance Regulatory Authority should put in measures to make the insurance companies adhere to the recent regulations and policies which require the companies to have minimum capital requirements and hence in turn increasing capital adequacy.

scholarly journals Regulatory Forbearance in the U.S. Insurance Industry: The Effects of Removing Capital Requirements for an Asset Class

2021 ◽  
Author(s):  
Bo Becker ◽  
Marcus M Opp ◽  
Farzad Saidi
Keyword(s):  
Insurance Industry ◽  
Capital Requirements ◽  
Insurance Companies ◽  
High Yield ◽  
Capital Regulation ◽  
Fixed Income ◽  
Portfolio Holdings ◽  
Asset Class ◽  
Regulatory Forbearance ◽  
The U.S

Abstract We analyze the effects of a reform of capital regulation for U.S. insurance companies in 2009. The reform eliminates capital buffers against unexpected losses associated with portfolio holdings of MBS, but not for other fixed-income assets. After the reform, insurance companies are much more likely to retain downgraded MBS compared to other downgraded assets. This pattern is more pronounced for financially constrained insurers. Exploiting discontinuities in the reform’s implementation, we can identify the relevance of the capital requirements channel. We also document that the insurance industry crowds outs other investors in the new issuance of (high-yield) MBS.

scholarly journals THE NEW CAPITAL ADEQUACY FRAMEWORK (BASEL III) OPTIONS AND ISSUES IN COMMERCIAL BANKS OF LITHUANIA

Ekonomika ◽  
2015 ◽  
Vol 93 (4) ◽  
pp. 119-134 ◽  
Author(s):  
Filomena Jasevičienė ◽  
Daiva Jurkšaitytė
Keyword(s):  
Banking Regulation ◽  
Capital Requirements ◽  
Capital Adequacy ◽  
System Stability ◽  
Basel Iii ◽  
Management Problem ◽  
Bank Capital ◽  
Factors Influencing ◽  
Capital Adequacy Ratio ◽  
The World

Currently, banking is one of the most regulated activities in the world, because banks are the most important institutional units engaged in financial intermediation and affects not only the whole national economy of the country, but the global financial market as well. One of the key components of banking regulation are requirements expected for the bank capital, which prevent the bank from various unforeseen risks incurring substantial losses and are a sort of guarantee to maintain the financial system stability. For this reason, it is useful to find out what factors affect the capital adequacy ratio, and what measures the banks are going to take in order to meet the new capital requirements. The present research reveals the options of the implementation of the new system and the main problems faced by banks. The paper consists of four main parts: review of theory and literature, the research methodology of the factors influencing the capital adequacy, the study of factors influencing the capital adequacy ratio, and the capital adequacy management problem areas according to the Basel III requirements and conclusions.

scholarly journals ANALISIS PRILAKU KONSUMSI MUSLIM PADA BULAN RAMADHAN

2019 ◽  
Vol 3 (1) ◽  
pp. 1
Author(s):  
Hareastoma Hareastoma
Keyword(s):  
Regression Analysis ◽  
Linear Regression ◽  
Multiple Linear Regression ◽  
Linear Regression Analysis ◽  
Multiple Linear Regression Analysis ◽  
Consumption Patterns ◽  
Coefficient Of Determination ◽  
Analysis Model ◽  
Factors Influencing

This study aims to analyze the patterns of Muslim consumption behaviors in the Ramadhan month around Jambi. A multiple linear regression analysis model is used to see the factors influencing the consumption behaviors. The finding shows that cultural and religiosity variables are the dominant factors influencing the pattern of Muslim consumption behaviors in the Ramadhan month. From the statistic results of SPSS verse 22, it was found the coefficient of determination (adjusted R2) obtained at 0.164. (16.4%). It reflects that 16.4% of consumption patterns influencing by the Cultural, Social, Religiusity and Psychology variables while the remaining 83.6% consumption patterns are influenced by unnecessary variables in this research.

HUMAN CAPITAL DI ERA DIGITAL

2020 ◽  
Vol 3 (1) ◽  
pp. 21-32
Author(s):  
Hani Damayanti ◽  
Nur Efendi ◽  
A. Rifa'i
Keyword(s):  
Human Capital ◽  
Data Analysis ◽  
Insurance Industry ◽  
Rapid Development ◽  
Development Program ◽  
Insurance Companies ◽  
Product Knowledge ◽  
Analysis Model ◽  
Digital Era

The insurance industry shows rapid development which proven by the improvement of the number of users of insurance products and high level of competition. To be able to compete in the digital era, insurance companies must be supported by marketers who have the knowledge, expertise, abilities and skills that make human capital or company assets (human capital). Human capital development program is not just a cost, but a long-term investment that can benefit the company in the long term. This study was aimed to determine, describe, and analyze the development of human capital marketers in the digital era in terms of insurance industry (Prudential Indonesia). The data analysis used was an interactive data analysis model developed by Miles & Huberman. The results of the research showed that Prudential Indonesia developed the human capital as a strategy for Prudential Indonesia to be the best and undefeated insurance industry in the digital era through continuous and up-to-date training. The development of human capital for marketers is done through the identification of human capital components, so that the marketers have product knowledge, licenses, experience, appearance, networks / connections, self-quality, independent, and creative. The other components such as motivation, support leaders, organizational atmosphere, and work group effectiveness will also influence the marketers to be able to achieve higher performance in order to compete in the digital era.   Program pengembangan human capital bukan hanya sekedar biaya, melainkan investasi jangka panjang yang dapat menguntungkan perusahaan dalam jangka waktu yang lama. Penelitian ini bertujuan untuk mengetahui, mendeskripsikan, dan menganalisis pengembangan human capital tenaga pemasar di era digital dalam industri asuransi (Prudential Indonesia). Analisis data menggunakan model interaktif yang dikembangkan oleh Miles & Huberman (2009). Hasil penelitian menunjukkan bahwa pengembangan human capital menjadi strategi untuk dapat bersaing di era digital melalui pelatihan yang berkelanjutan. Pengembangan dilakukan melalui identifikasi komponen human capital, agar tenaga pemasar memiliki pengetahuan produk, lisensi, pengalaman, penampilan, jaringan/koneksi, kualitas diri, mandiri, serta kreatif. Komponen lain seperti motivasi, support leader, suasana organisasi, dan efektifitas kelompok kerja juga akan mempengaruhi tenaga pemasar untuk dapat mencapai kinerja yang lebih tinggi agar dapat bersaing di era digital.

scholarly journals GOVERNMENT REGULATION AND SUSTAINABILITY OF KENYA’S INSURANCE COMPANIES

1970 ◽  
Vol 4 (1) ◽  
pp. 1
Author(s):  
Johannes Mwangangi Kitaka ◽  
Dr. David Kiragu ◽  
Prof. Simmy M. Marwa
Keyword(s):  
Data Collection ◽  
Customer Service ◽  
Government Regulation ◽  
Secondary Data ◽  
Capital Adequacy ◽  
Insurance Companies ◽  
Primary Data ◽  
Measurement Tool ◽  
Unique Contribution ◽  
Validity And Reliability

Purpose: The study investigated government regulation and sustainability of Kenya’s insurance companies. Methodology: The study adopted the positivist research philosophy and employed a descriptive research design. The target population of the study was the 51 insurance companies registered by the Insurance Regulatory Authority (IRA) of Kenya as at 31st December 2016. The study took a proportionate sample of 30 companies from 10 life, 15 general and 5 composite companies. The primary data collection was through a structured questionnaire with closed questions. A pilot study was carried out before questionnaire distribution, which ensured the research instrument validity and reliability, before distribution through both hand delivery and email, followed by a telephone call to the respondents and a research assistant later visiting the respondents to collect the filled questionnaires. The raw data was cleaned, edited, coded and analyzed to generate descriptive statistics of ANOVA and T-test and inferential statistics of mean, standard deviation and frequencies,  while secondary data was collected using data collection sheets. Study Findings: The findings showed that there is a moderating effect of government regulation on drivers of sustainability of insurance companies in Kenya. While there was positive and significant effect of government regulation on capital adequacy, management capability and sensitivity to risk, government regulation had no moderation on asset quality as management of other variables of management quality, capital adequacy and risk sensitivity would address the quality of capital. Unique Contribution: The study recommends that IRA opens up the RBC measurement tool to bring in sustainability and management indices. Further, IRA should review regulation to support the insurance companies to enhance innovation and customer service delivery, which are key for growth, and sustainability of the various insurance companies in the country.

scholarly journals Failure threats of insurance companies: A case study of financial environments of Jordan

2021 ◽  
Vol 18 (3) ◽  
pp. 113-126
Author(s):  
Hussein Mohammad Salameh
Keyword(s):  
Insurance Industry ◽  
Capital Adequacy ◽  
Insurance Companies ◽  
Model Parameters ◽  
Issues Management ◽  
Failure Model ◽  
Financial Failure ◽  
Insurance Firms ◽  
Expansion Capacity ◽  
Financial Environment

Insurance firms are known to have unique financial failure characteristics that affect the financial environment of the countries. Therefore, the purpose of this study is to assess the validity of the model used in predicting the financial failures of insurance companies. The model is believed to help in stabilizing the financial environment of the countries by predicting any collapses in the insurance sector. A discriminate regression technique was used to test 28 indicators chosen from 11 financial failure model parameters. 11 parameters of the model are the following: solvency, profitability, operational capabilities, structural soundness, capital expansion capacity, capital adequacy, reinsurance and actuarial issues, management soundness, capital expansion capacity, earnings and profitability, and liquidity. The results of the study proved that 22 variables from 11 parameters were significant; the study also validated the use of the financial failure model as a stable predictor of the financial failure of ASE insurance firms. The stability of the insurance industry is interpreted through the minimum deviation between the real and measured performances. The deviation was present in 3 out of 95 observations, and it affected only 3 firms out of 19, 1 firm out of 3 turned out to be affected by the risker deviation which is the type II error distorted observation. To conclude, the study by mentioning that insurance firms are not threatened by failure or distress and the financial failure model is a valid prediction model.

scholarly journals PENGARUH RISK BASED CAPITAL DAN PENDAPATAN INVESTASI TERHADAP RETURN ON ASSET

2020 ◽  
Vol 5 (1) ◽  
pp. 23
Author(s):  
Hanafi Hanafi ◽  
Diding Apendi
Keyword(s):  
Regression Analysis ◽  
Quantitative Methods ◽  
Linear Regression Analysis ◽  
Multiple Linear Regression Analysis ◽  
Capital Adequacy ◽  
Insurance Companies ◽  
Insurance Company ◽  
Return On Assets ◽  
Independent Variables ◽  
Investment Income

Risk Based Capital is a ratio to measure the level of capital adequacy in insurance companies. Insurance income is one of them from investment income, because insurance operations by investing their assets in order to generate profits. Return On Asset is a ratio that describes insurance in managing funds invested in overall assets. The formulation of the problem in the study: 1). How does the effect of risk based capital and investment income partially affect the return on assets of insurance companies in the FSA 2013-2018? 2). How does the effect of risk based capital and investment income simultaneously affect the return on assets of the Insurance Company in OJK 2013-2018? 3). How much influence does risk based capital and investment income have on return on assets for insurance companies in the OJK 2013-2018? This research uses quantitative methods with multiple linear regression analysis. Conclusion Hypothesis testing shows the value of tcount for risk based capital variable tcount risk based capital of -2.488. t table is 2.018082. So t arithmetic -2.488 <table 2.018082, Ho is accepted, risk based capital affects the return on assets. And the Investment Income of tcount is -0,993. Obtained t table is 2.018082. So t arithmetic -0.993 <table 2.018082, Ho is accepted, there is no real influence between investment income and return on assets. Fcount 3.610 and F table 3.22. Ho is rejected independent variables significantly influence the dependent variable. Risk Based Capital and Investment Income influence on Return On Assets (ROA) of 16%.

High-frequency analysis, Model Validation and Intraday risk metrics

2019 ◽  
Author(s):  
Ravi Summinga-Sonagadu
Keyword(s):  
Model Validation ◽  
Internal Control ◽  
High Frequency ◽  
Insurance Industry ◽  
Garch Model ◽  
Capital Requirements ◽  
Garch Models ◽  
Analysis Model ◽  
Error Distributions ◽  
Distributional Assumptions

https://www.mdpi.com/2227-9091/7/1/10 Background Despite the growing amount of research in the field of high frequency financial data analysis, few studies have focused on model validation and high-frequency risk measures. This study contributes to the literature in the following ways: A rigorous model validation, both in terms of in-sample fit and out-sample performance for the MC-GARCH model under five error distributions is provided. Statistical and graphical tests are conducted to validate the models. One component of the MC-GARCH model is the daily variance forecast. For this purpose, the GARCH(1,1) and EGARCH(1,1) under the five error distributions are compared and the best model among the 10 GARCH models is used to forecast the daily variance. The modelling and forecasting performance of the MC-GARCH model under different distributional assumptions is assessed in this study. The 99% intraday VaR is forecasted and three backtesting procedures are used. This is the first study to assess the VaR predictive ability of the MC-GARCH models by using an asymmetric VaR loss function. This is the first study to forecast the intraday expected shortfall under different distributional assumptions for the MC-GARCH model. Again, three backtests are used including the recently proposed ES regression backtest. Due to the high importance of risk management, the results of this study may contribute in many fields. This study is highly relevant to the banking industry since banks are required to calculate risk metrics on a daily basis for internal control purposes and for determining their capital requirements. Risk measurement is also essential to the insurance industry from the pricing of insurance contracts to determining the Solvency Capital Requirement (SCR) and therefore the results of this study might be useful. Any other organisation having an exposure to some kind of financial risk might benefit from this study.&nbsp;

scholarly journals Faktor-Faktor Penentu Kredit Produktif Bank Pembangunan Daerah di Indonesia

1970 ◽  
Vol 4 (01) ◽  
pp. 73-86
Author(s):  
Erfin Effendhi ◽  
Suyanto Suyanto
Keyword(s):  
Regression Analysis ◽  
Capital Investment ◽  
Linear Regression Analysis ◽  
Multiple Linear Regression Analysis ◽  
Jel Classification ◽  
Capital Adequacy ◽  
Analysis Model ◽  
Efficiency Ratio ◽  
Nonperforming Loans ◽  
Investment Capital

ABSTRACT This study aimed to analyze and goverment capital investment, capital adequacy ratio, non-performing loan, and operational efficiency ratio, to credit productive at Bank Pembangunan Daerah for the period 2010 -2015. The sample used in this study were 68 banks. Methods of data analysis using multiple regression analysis model. The test is done by multiple linear regression analysis. The result of this research is the effect of government capital investment and efficiency ratio toward productive credit. However, the ratio of capital adequacy and nonperforming loans is not a determinant of the provision of productive credit in the sample under study. The results of this research have implications on the importance of research findings related to the effect of other untested financial ratios in this study, including the ratio of the amount of loans disbursed to the receipt of funds from third parties. ABSTRAK Penelitian ini bertujuan untuk menganalisis pengaruh penyertaan modal, rasio kecukupan modal, kredit bermasalah dan rasio efisiensi bank terhadap kredit produktif pada bank pembangunan daerah. Sampel diuji sebanyak 68 bank selama 2010-2015. Pengujian dilakukan dengan analisis regresi linier berganda. Hasil penelitian adalah terdapat pengaruh penyertaan modal dan rasio efisiensi terhadap kredit produktif. Namun, rasio kecukupan modal dan kredit bermasalah bukan penentu pemberian kredit produktif pada sampel yang diteliti. Hasil penelitian berimplikasi pada penting temuan riset terkait pengaruh rasio keuangan lain yang belum diuji dalam penelitian ini, termasuk rasio jumlah kredit yang disalurkan dengan penerimaan dana dari pihak ketiga. JEL Classification: G21, E50

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