




































INDIAN JOURNAL OF FINANCE AND BANKING 9(1) (2022), 213-229 

 

213 

 

 

                   FINANCE AND BANKING 

                                                                    IJFB VOL 9 NO 1 (2022) P-ISSN 2574-6081  E-ISSN 2574-609X 
                                                  

        Available online at https://www.cribfb.com 

                                                                                                                                           Journal homepage: https://www.cribfb.com/journal/index.php/ijfb 

                                                                                                                                                                                                   Published by CRIBFB, USA 

ANALYSIS OF THE FACTORS AFFECTING THE FINANCIAL 

PERFORMANCE OF INSURANCE COMPANIES LISTED ON THE 

PALESTINE STOCK EXCHANGE                    

 
 Firas S. Q. Barakat (a)   Jawad Hussein (b)   Oroubah A. R. Mahmoud (c)1  Mohammed Bayyoud (d) 

 

(a) Ph.D., Assistant Professor, Department of Accounting, Faculty of Economics and Business, Al-Quds University, Palestine; E-mail:     

fbarakat@staff.alquds.edu 
(b)   External Auditor, Insurance Sector in Securities Exchange Commission, Palestine, E-mail: jawadhussein38@gmail.com 
(c) Ph.D., Assistant Professor, Department of Banking & Finance, Faculty of Economics and Business, Al-Quds University, Palestine, E-mail:       

omahmoud@staff.alquds.edu 
(d) Lecturer, Department of Banking & Finance, Faculty of Economics and Business, Al-Quds University, Palestine, E-mail: mbayyoud@staff.alquds.edu 

 

 
A R T I C L E I N F O 

 
 

Article History: 
 

Received: 24 January 2022  

Accepted: 26 March 2022 
Online Publication: 31 March 2022 

 
Keywords: 

 

Financial Performance, Insurance, Solvency 
Margin, Reinsurance, Institutional Factors 

Governance 

 
JEL Classification Codes: 
 

G32, G22, G34, H54 

 

 

 

 

 

  
    

 

 
A B S T R A C T 
 
The objective of this study was to investigate the factors affecting the financial performance of 

insurance companies in Palestine. The entire study population was targeted at 7 insurance companies 

listed on the Palestine Exchange for the period between 2010 and 2019. The researchers used multiple 
linear regression analysis to create two models that represent the financial performance; the study 

adopted two models for measuring financial performance, the first model measuring financial 

performance by return on assets, and the other measuring financial performance by return on equity. 

The results showed a positive and statistically significant impact on the solvency margin, the state's 

legal system, the size of the board of directors, and the size of the company on the return on assets. 

There is a negative, statistically significant impact on each of the claims loss ratios, the dependence on 

the four major auditing firms, and the ownership of board members on the return on assets. The 

reliability of reinsurance and the audit committee did not show a statistically significant effect on the 
return on assets. The results showed a positive, statistically significant impact of the solvency margin 

and company size on the return on equity. The results indicate a negative, statistically significant 

impact of both the claims loss ratio and the Audit Committee on the return on equity. Reinsurance 

dependent, dependence on the four major auditing companies, the state's legal system, the size of the 

board of directors, and the ownership of board members have no significant effect on the return on 

equity. The study recommends that insurance companies in Palestine should comply with the required 

margin of money, which was set by the Palestinian Capital Market Authority at 150%. 
 

 

© 2022 by the authors. Licensee CRIBFB, USA. This article is an open access article  distributed 
under the terms and conditions of the Creative Commons Attribution (CC BY) license 
(http://creativecommons.org/licenses/by/4.0/).  

                                                     

 

INTRODUCTION 

Insurance companies play an important role in economic growth, as insurance companies facilitate various economic 

transactions in the country by transferring risks and providing compensation. These companies provide financial security in 

the country (Cudiamat & Siy, 2017), as they enhance local and foreign investment opportunities, which positively affects 

the economic growth of the country. 

        The insurance services provided by insurance companies for the benefit of other businesses, whether companies or 

individuals, help them to continue working and achieve profits by transferring some of the risks to insurance companies. In 

this sense, the developed insurance industry is an important factor for economic development because it works to reduce 

the material risks faced by the various economic sectors; this is because it helps companies to continue their operations 

without worrying about the occurrence of unusual events that limit their production capacity (Mogro & Barrezueta, 2019). 

                                                      
1Corresponding author: ORCID ID: 0000-0003-0654-3690 
© 2022 by the authors. Hosting by CRIBFB. Peer review under responsibility of CRIBFB, USA.  

https://doi.org/10.46281/ijfb.v9i1.1679 

 
 

To cite this article: Barakat, F. S. Q., Hussein, J., Mahmoud, O. A. R., & Bayyoud, M. (2022). ANALYSIS OF THE FACTORS AFFECTING THE 

FINANCIAL PERFORMANCE OF INSURANCE COMPANIES LISTED ON THE PALESTINE STOCK EXCHANGE. Indian Journal of Finance and 
Banking, 9(1), 213-229. https://doi.org/10.46281/ijfb.v9i1.1679 

mailto:jawadhussein38@gmail.com
http://creativecommons.org/licenses/by/4.0/)
http://creativecommons.org/licenses/by/4.0/)
https://doi.org/10.46281/ijfb.v9i1.1679
https://orcid.org/0000-0003-3065-4681
https://orcid.org/0000-0001-8604-2997
https://orcid.org/0000-0003-0654-3690
https://orcid.org/0000-0002-1336-0545


Barakat et al., Indian Journal of Finance and Banking 9(1) (2022), 213-229 

  

214 
 

Insurance refers to procedures, systems, or businesses whereby financial protection (or financial compensation) for 

life, property, health, etc. is compensated for unforeseen events that can occur such as death, loss, damage or illness, 

involving regular premium payments during a certain period Against policies that guarantee this protection (Johny, 

Purwoko, & Merawaty, 2021). 
       On the other hand, the term insurance can be defined by two schools of thought: transfer School and pooling school: 

According to transfer School “Insurance is a device for reducing uncertainty of one party, called the insured, by transferring 

certain risks to another party; called the insured, which offers a repair, at least in part, of the economic losses incurred by 

the insured. pooling school: According to the pooling school “the essence of insurance is to eliminate the uncertainty or risk 

of loss for an individual by bringing together a large number of similarly exposed individuals”, insurance works On the 

principle of risk pooling where people contribute to a mutual fund in the form of premiums and where the lucky ones who 

do not incur a loss help the unlucky who suffer a loss during a specified insurance period (Deyganto & Alemu, 2019). 

 

Importance of the Study 

The utmost importance of this study stems from the fact that it helps in analysis factors that affecting the performance of 

Palestinian insurance companies, which helps in identifying the strengths and weaknesses within these companies in terms 

of: insurance factors, institutional factors, and governance factors, by providing information Sufficient performance of the 

company from which internal bodies (company management) benefit from, in addition to external bodies benefiting from 

financial analysis data such as: auditors, in the analytical tests, and any other party of rational economic decision-makers. 

 

Problem of the Study 
Many studies have focused on the factors affecting the financial performance of insurance companies, many areas have been 

studied by many researchers, but there are still many unresolved issues in the previous literature. The reason for this literary 

gap is that each country has a different economic, financial and political structure. Similarly, from one time period to another, 

very few studies were found that examined factors affecting the financial performance of insurance companies by addressing 

more than one axis, for example, the extent to which insurance industry factors and governance factors affect the financial 

performance of insurance companies were not studied. Insurance in Palestine. Also, previous literature did not address 

institutional factors and their impact on the performance of financial insurance companies. This study attempts to answer 

the following questions: 

 

First main question: What is the extent of the impact of insurance industry factors on the financial performance of insurance 

companies listed on the Palestine Stock Exchange? 

 

Sub-questions 

 What is the extent of the impact of the solvency margin of the insurance company on its financial performance? 

 What is the extent of the impact of the insurance company's claims loss ratio on its financial performance? 

 What is the extent of the impact of the reinsurance reliability of the insurance company on its financial performance?  

 

Second main question: What is the extent of the impact of institutional factors on the financial performance of insurance 

companies listed on the Palestine Stock Exchange? 

 

Sub-questions 

 What is the extent of the impact of relying on the Big Four to audit the accounts of the insurance company on its 

financial performance? 

 What is the extent of the impact of the state's legal system on the financial performance of insurance companies? 

Third main question: What is the extent of the impact of governance factors on the financial performance of insurance 

companies listed on the Palestine Exchange? 

Sub-questions 

 What is the extent of the impact of the size of the insurance company's board of directors on its financial 

performance? 

 What is the extent of the impact of the ownership of the board of directors of the insurance company on its financial 

performance? 

 What is the extent of the impact of the existence of the audit committee emanating from the board of directors of 

the insurance company on its financial performance? 

 

Limitations of the Study 

It is related to the theoretical and practical frameworks of the study: the study was limited to the financial ratios and dummy 

independent variables distributed over three groups, the insurance industry factors, institutional factors, and governance 

factors (which were mentioned only within the theoretical and practical frameworks). It included a total of eleven percentage 

points among all independent, dependent, and control factors, for which the researcher had sufficient financial data to 

calculate. 

 

 



Barakat et al., Indian Journal of Finance and Banking 9(1) (2022), 213-229 

  

215 
 

THEORETICAL FRAMEWORK 

The Theories 

Institutional Theory  

Institutional theory revived in 1977, (Meyer & Rowan, 1977) identified the foundations of institutional theory when 

discussing the environment of formal institutional structures, and (DiMaggio & Pawell, 1983) explained the existence of an 

impact of the common legal environment in the form of the behavior and structure of institutions in addition to the impact 

of the institution on the social environment and political decisions. Scott (2008) reported that institutional theory looks at 

the environment influencing the institution such as the political, legal and social environment, and defines institutional 

theory as "a widely accepted theoretical position that emphasizes rationality, similarity, and legitimacy myths." Institutional 

Theory This study is based on the institutional theory, because it studies the impact of the state's legal environment on the 

financial performance of insurance companies. 

 

Legitimacy Theory  

Suchman (1995) defines legitimacy as a generalized perception or assumption that the actions of an entity are desirable, 

appropriate, or appropriate within a socially constructed system of rules, values, beliefs, and definitions. In other words, 

legitimacy is the process by which an organization justifies its right to exist for a peer or superior system (Mousa & Hassan, 

2015). Legitimacy relies heavily on subjective and collective assessments of powerful stakeholders resulting in a better 

understanding of legitimacy as socially constructed (Dube & Maroun, 2017). Organizational legitimacy is defined as “a 

condition, which exists when the value system of an entity is identical with the value system of the larger social system of 

which the entity is a part. When there is a discrepancy, actual or potential between the two value systems, there is a threat 

to the entity’s legitimacy,” “legitimacy theory indicates that when there is a discrepancy between company actions and 

societal expectations, management uses disclosure methods such as annual reports in order to help alleviate societal concerns 

or, more precisely, what they consider to be societal concerns (Lanis & Richardson, 2012). 

 

Agency Theory  

The beginnings of agency theory go back to Smith (1776) when he posed the problem of separating ownership and 

management at work. Agency In cases where one individual called the agent is engaged by another individual called the 

owner (principle) to act on his behalf on a fixed remuneration, both persons are assumed to be the beneficiary, and motivated 

by financial and non-financial factors, incentive problems may arise , especially in light of information uncertainty and 

inconsistency (Birjandi, Hakemi, & Sadeghi, 2015). Osho and Ayorinde (2018) clarified the principal-agent relationship as 

a contract under which one or more (principal) principles engage another agent (the agent) to perform some service on their 

behalf, which includes giving some decision-making power to the agent. While the intent of both parties in an agency 

relationship is to act in the interest of the owner (principle), information asymmetry and greed tempt management to pursue 

personal goals rather than those of the owner (principle), this conflict of interest or mismatch of goals between management 

and shareholders is described as Agency problem. This theory helps in implementing various governance mechanisms to 

control the work of agents in companies (Panda & Leepsa, 2017). 

         Panda and Leepsa (2017) classified the agency problem into three types, the first type is between the owners 

(principles) and agents (agents), which arises due to the asymmetry of information and the variance in risk-sharing situations, 

the second type of conflict occurs between the major and small shareholders, and it arises Because the major owners make 

decisions in their favor at the expense of the minor shareholders. The third type of agency problem occurs between owners 

and creditors. This conflict occurs when owners make more risky investment decisions against the will of the creditors. 

 

Stakeholder Theory  

Stakeholder theory has been found to be a particularly useful viewpoint for addressing some of the important issues in 

business from an international perspective. It provides an opportunity to reinterpret a variety of concepts, models, and 

phenomena across different disciplines. Stakeholders are typically defined as individuals, groups, and organizations that 

have an interest in a company's operations and results and on which a company depends to achieve its goals, and include 

employees, managers, shareholders, financiers, customers, and suppliers (Harrison, Freeman, & Sá de Abreu, 2015). In other 

words, stakeholders are defined as any group or individual that can influence or be affected by a company's achievement of 

its objectives or performance (Miles, 2017). 

 

The Variables Definitions 

Solvency Margin  

The concept solvency margin appeared in the 1970s in Europe. Until then, the only condition that a life insurance company 

had to fulfill was that after distribution of the surplus, if any, the value of its assets should not be less than the value of its 

liabilities. Instead, it was stipulated that the value of assets should exceed the value of liabilities by a certain margin. This 

margin was known as the solvency margin (Gour & Gupta, 2012).  In general, solvency is a measure of a company's long-

term financial ability. It refers to the company's ability to meet its long-term financial obligations. While solvency is of 

interest to various stakeholders in the organization, it is of paramount importance to both investors and creditors (Morara & 

Sibindi, 2021).  A creditworthy and concessional company is one that is in a position to pay current and subsequent claims 

as they become due (going case), the higher the solvency margin, and the greater the level of confidence of creditors, 

investors, existing customers and potential customers (Morara & Sibindi, 2021). Solvency margin has been under study and 

development since the early 2000s and has come to be called Solvency II which is currently one of the most complex 



Barakat et al., Indian Journal of Finance and Banking 9(1) (2022), 213-229 

  

216 
 

insurance systems in the world. It is built on the principles of market consistency and integrating strong risk management 

and governance within insurance companies. For businesses with long-term guarantees. The previous solvency margin 

system, in force since the 1970s and which has come to be known as first solvency, was not risk sensitive and a number of 

key risks, including market, credit and operational risks, were not explicitly considered in the capital requirements (Rae, 

Barrett, Brooks, Chotai, & Pelkiewicz, 2018). 

 

Claims Loss Ratio  

Claims are amounts payable. Also known as claims loss ratio, the claims ratio is measured by the number of claims in a 

period divided by the total premiums earned for the same period. As part of insurance operations is liquidity risk 

management and it is necessary to have a thorough understanding of the proportion of claims incurred, if the value is higher 

than expected or established standards, then further investigation is required to find out the reason for this and it is important 

to check whether there is a threat of insurance fraud, if The ratio was lower than expected and may indicate unrelated 

products or difficulties in claiming, which may affect customer satisfaction, and obviously requires further investigation 

(Olalekan, 2018). In other words, claims are the ratio of total losses incurred “paid and reserved” in claims plus adjustment 

expenses divided by total premiums earned. For insurance companies (Berhe & Kaur, 2017).  

 

Reinsurance  

In this modern era, risk conscious individuals and organizations with a high level of risk seek adequate protection against 

the negative consequences that may arise due to the presence of risks. The insurance company also seeks, in order to reduce 

its heavy liabilities, to transfer part of the burden of risk to other institutions, namely, reinsurance companies (Adekunle & 

Stephen, 2017). In other words, reinsurance is one of the ways in which insurance companies effectively transfer parts of 

their risks arising from insurance claims. It is clear that reinsurance brings benefits not only to the reinsurance company, 

but also to the insurance company (Huang, Ouyang, Tang, & Zhou, 2018). Reinsurance has many benefits. First, low 

volatility in underwriting results will protect insurance companies from unexpected large losses and reduce the capital 

required to support the business, since capital has a cost, the use of reinsurance may reduce the average cost of capital and 

increase the value of the company. Second, with reinsurance insurers can insure more risk with the same amount of capital, 

thus spreading their overheads over a broader base of business. Third, improved solvency may help reduce the traditional 

underinvestment problem and improve the financial quality of insurance companies. As a result, policyholders will not 

demand these high-risk compensation, which may lead to lower insurance rates. Fourth, because reinsurance premiums are 

tax-deductible, using reinsurance may improve the profitability of insurance companies. Finally, by accessing the expertise 

of reinsurers, insurers may achieve a better understanding of assumed risks and ensure more accurate risk assessments (Lei, 

2019). 

 
Big4  

Audit firms provide reasonable assurance of the correctness of financial statements to investors. It is a formal external 

oversight mechanism that can provide institutional legitimacy. The auditor's report will be more important in countries 

where legal systems are weak, the company's external auditor can have an impact on the quantity and quality of financial 

and non-financial statements. Large and international audit firms require more compliance with international accounting 

and auditing standards, as audit firms follow in their procedures and implement the control aspects required by international 

auditing standards, providing better quality auditing and auditing than local firms. They can usually advise on disclosing 

more information, these companies are usually larger than local companies. Rahman, Meah, and Chaudhory (2019) indicated 

that the size of the audit firm is an influencing factor on the financial performance of companies. 

 

Legal System  

The political and legal environment and economic growth have a relationship with each other. A stable political environment 

is important for the insurance industry to develop and thrive. Likewise, a country experiencing political instability hampers 

economic growth and creates an uncertain environment for investment (Pant & Bahadur KC, 2019). The institutional 

framework and political stability of the state are important in a number of economic areas, including the insurance industry. 

It is clear that legal rules are important to this sector, based on the contractual obligations assumed by both parties and the 

insurance industry is expected to develop further if the insured persons feel protected by the legal system and law 

enforcement. Moreover, the integrity of this legal environment depends on the political context, for example, controlling 

corruption can significantly affect confidence in the insurance system in general, due to short or long-term private 

engagements. Using the average of six indicators to measure voice and accountability, political stability, government 

effectiveness, organizational quality, rule of law, and control of corruption (Mare, Dragos, Dragota, & Muresan, 2016). 

 
Board Size   

The size of the Board of Directors refers to the total number of board members of any company, and determining the ideal 

size of the board of directors for companies is very important because the number and quality of directors in the company 

determine and affect the performance of the Board of Directors and thus the performance of the company (Azutoru, Obinne, 

& Chinelo, 2017). The size of the Board of Directors is quantitative in relation to the number of components (board size) 

and has resulted in conflicting evidence about the effectiveness of governance: for some large councils allow for a more 

effective integration of opinions, experiences, skills and contacts and therefore have a positive relationship, and for others 



Barakat et al., Indian Journal of Finance and Banking 9(1) (2022), 213-229 

  

217 
 

the mark is negative because as the size of members increases, coordination becomes more difficult and this increases the 

strength of the CEO (Anderloni, Moro, & Tanda, 2020). 

 

Ownership of Board Members   

The Board of Directors is responsible for maintaining assets in order to facilitate the completion of administrative work and 

contribute to high efficiency (Dakhlallh, Rashid, Abdullah, & Dakhlallh, 2019), has proposed several internal and external 

governance mechanisms that, such as board formation, internal ownership or council ownership and external ownership as 

a means of controlling agency disputes and reducing agency costs. Many accounting theories, including agency theory and 

consolidation theory highlight the critical role of internal ownership or ownership of board members, suggest that such types 

of board ownership can serve as a double-edged sword in terms of their impact on agency costs and company performance. 

The ownership of board members can reduce agency conflicts as a result of aligning interests between board members and 

owners. However, higher levels of board ownership can create a state of agency conflict by encouraging controlling 

shareholders to act opportunistically to confiscate wealth from other shareholders (Habtoor, 2021). 

 
Audit Committee    

The Audit Committee can be defined as "a select number of board members whose duties include helping auditors remain 

independent of management," the majority of audit committees are board members who are not members of the company's 

executive management (Dakhlallh, Rashid, Abdullah, & Al Shehab, 2020). The Audit Committee makes a significant 

contribution to the Company as part of the application of corporate governance principles in the form of high-quality internal 

supervision of the company to preserve the rights of shareholders and corporate stakeholders. The audit committee's duties 

are closely linked to the review of the risks faced by the Company, as well as compliance with regulations, the Audit 

Committee must participate in the appointment of external auditors, taking into account risks, including the potential for 

inadequate scrutiny and non-independent external auditors and/or the performance of external auditors who do not meet 

Standards (Sofia & Avianti, 2019).  The chairman of the audit committee must be independent and must have appropriate 

financial experience (Sankhla, 2021). 

 
Company Size     

Company size can be measured in different ways such as total assets, stock market value, average sales level and sales 

amount (Djunid & Amelia, 2018). As well (Qoyum, Setyono, & Qizam, 2017) says the size of the company is displayed 

through total assets, total sales, average total sales and average total assets. 

 

Return on Assets 

Return on assets is the percentage of profitability that provides the amount of profit a company can make from its assets. In 

other words, RoA measures the efficiency of the company's management in making profits from its economic resources or 

assets on its balance sheet. The company's net income reflects the amount of profit the company makes. To increase return 

on assets, companies must be able to improve the position and growth of dividend-generating assets (Puspitasari, Sudiyatno, 

Hartoto, & Widati, 2021). 

 
Return on Equity  

ROE is part of the profitability ratios that must be known to management in its capital management. Roe is the ratio for 

measuring net income after tax with private capital. This ratio demonstrates the efficiency of private capital use, the higher 

the position of the company's owners, and vice versa, roe is the ratio used to assess the extent to which the company uses 

its resources to be able to provide a return on equity (Junaeni, 2017). 

 
LITERATURE REVIEW 

Insurance Industry Factors 

Koc (2016) aimed to identify factors affecting the performance of ISE-listed insurance companies represented by the return 

on net assets (ROA), and used Panel data analysis to study the eight-year period between 2008 and 2015. It concluded that 

there was a positive correlation between the performance of insurance companies and the number of their agents, the profit-

to-premium ratio earned and the financial assets of the investment profit, while a negative correlation between the 

performance of insurance companies and the loss ratio was identified. While (Ishtiaq & Siddiqui, 2019) focus on Factors 

affecting the financial performance of Pakistan's life insurance sector, potential internal and external factors including 

liquidity, net premiums, premium growth, underwriting risk and debt to equity, insurance leverage, concrete, equity capital, 

capital surplus, GDP, inflation and market share were used to assess their impact, while the sector's return on assets (ROA) 

was used as a performance appraisal indicator for years from 2008-2017 from nine insurance companies on Life. The results 

were analyzed using panel data to form a normal micro-square slope model and use the generalized moment method to 

estimate the results. Its results showed that tangible, market share, net premiums, insurance leverage and GDP had no D or 

negative impact on the financial performance of PSC, while other independent variables such as liquidity, underwriting risk, 

and debt to equity, equity capital, surplus capital and inflation had a positive and significant statistical impact. 

  Abebe and Abera (2019) examined the financial performance determinants of insurance companies in Ethiopia 

from 2010 to 2015. Profitability ratios were used as a means of measuring financial performance; return on assets (ROA) 

and return on equity (ROE). The panel data study was used by 9 insurance companies for 6 years. To determine financial 

performance determinants, the researcher used the normal ols method. The result of the estimate showed that capital 



Barakat et al., Indian Journal of Finance and Banking 9(1) (2022), 213-229 

  

218 
 

adequacy, liquidity, size, age, loss and leverage were the main determinants of financial performance. Mazviona, Dube, and 

Sakahuhwa (2017) focused his study on factors affecting the performance of insurance companies in Zimbabwe. The 

researcher used secondary data from 20 short-term insurance companies. The data for the period 2010-2014. Analysis of 

multiple factors and linear regression models was used to identify and determine the impact of performance factors. One of 

its results is that the ratio of expenses, the proportion of claims and the size of the company adversely affect the performance 

of insurance companies. Leverage and liquidity positively affect performance. It recommended that insurance companies 

introduce mechanisms that reduce operational costs such as automated systems.  
  Deyganto and Alemu (2019), aimed to identify factors affecting the financial performance of insurance companies 

operating in Ethiopia. The researchers used a causal research design with a mixed research approach that targeted the study's 

target community of 17 insurance companies operating in Ethiopia, and the researchers selected 6 public insurance 

companies with audited financial data for 10 years from 2008 to 2018. Collected through a review of financial statements 

and published and unpublished materials, the results of the study show that premium growth, solvency ratio, GDP growth 

rate and inflation rate have a statistically significant impact on the financial performance of insurance companies, while 

reliance on reinsurance, company size and interest rate have no significant impact on the financial performance of the 

insurance company. Johny, Purwoko, and Merawaty (2021) to analyze the simultaneous and partial impact of total insurance 

premiums, claim reserve, premium reserve and payment of claims on return on assets, the sample included 10 insurance 

companies listed on the Indonesian Stock Exchange, the data was processed using version 9 of Eviews, the results of which 

were that total premiums had a positive and significant impact on return on assets, reserve claims having a negative impact 

and indicative of return on assets, for allocations a positive but insignificant effect on return on assets and claims payments 

It has a negative impact on return on assets. 
  Daare (2016) investigate the factors that determine the profitability of insurance companies in India for eight 

insurance companies for the period 2006-2016 dealing with eight variables, and concluded that the company's size, liquidity 

and inflation are statistically significant factors that determine the profitability of insurance companies in India. The study 

recommended that insurance managers pay close attention to current asset management and current responsibility to 

maintain optimal liquidity status while inflation is also important from external variables. Kaya (2015) investigate the 

financial performance analysis of insurance companies traded on the Istanbul Stock Exchange (BIST) from the end of 2014 

through the Grey Relationship Analysis Method (GRA), for the period 2010-2014 in terms of capital adequacy ratios, 

liquidity ratios, operating ratios, and profitability ratios. Tarsono, Ardheta, and Amriyani (2019) analyzed the impact of net 

premium growth, claim ratio and risk-based capital on the financial performance of insurance companies, and the study 

community was an insurance company listed on the Indonesian Stock Exchange from 2014-2018, with a sample size of 17 

life insurance companies. The study concluded that there was no impact on net premium growth and claim ratio on financial 

performance, risk-based capital having a negative impact on the financial performance of life insurance, namely the return 

on assets, the three ratios of net premium growth, claims ratio and risk-based capital affect the financial performance of life 

insurance companies represented by the return on assets. 

 

Institutional Factors 

Rahman, Meah, and Chaudhory (2019) focused on detecting the impact of audit characteristics on the company's 

performance, using the quality of external audit (BIG4), the frequency of audit committee meetings and the size of the audit 

committee as models of audit characteristics and the company's performance is measured by return on assets, profit margin 

and earnings per share. During 2013-2017 to see the impact of audit characteristics on the company's performance. The 

researcher used multiple regression analysis, and one of its findings is that the quality of external audit (BIG4) and the size 

of the audit committee are positively related to the company's performance, as well as a negative relationship between the 

audit committee meeting and the company's performance. Recommended that the regulatory authority and the audit 

committee review the frequency of audit committee meetings to make them more effective to ensure better company 

performance. Farouk and Hassan (2014) was concerned with the impact of quality audit on the financial performance of 

nigeria-listed companies. The study used the descriptive approach. The data was obtained from published annual reports 

and accounts and notes on the financial statements of the four companies representing the study sample. Results have shown 

that the size of the auditor and the independence of the auditor have significant impacts on the financial performance of 

cement companies listed in Nigeria. However, the auditor's independence has a greater impact than the auditor's size on 

financial performance. 

  On the other hand, (Dragos, Mare, Dragota, Dragos, & Muresan, 2017) investigated the impact of institutional 

factors on life insurance demand in 32 European countries found that the demand for life insurance is differently influenced 

by institutional indicators from the global governance indicators database, in emerging and transitional markets compared 

to developed markets. He noted that the sound legal environment in developed countries, so that the level of the rule of law 

was very homogeneous and high, made it irrelevance to the demand for life insurance. For developing countries, the 

enforceability of contracts, the independence of justice and the efficiency of time in the judicial process positively affect 

citizens' decision to purchase life insurance contracts. 

 

Governance Factors 

Ebere, Ibannichuka, and Ogbonna (2016) investigated the corporate governance system with the aim of identifying the 

relationship between board size, board composition, earnings per share (EPS) and return on assets (ROA) of Nigeria-listed 

insurance companies for the period 2008-2015, data was collected from 14 insurance companies and analyzed and the 

researcher used Pearson link and multiple regression analysis, and the results of which are that the size and composition of 

the Board of Directors contribute significantly to the financial performance of insurance companies in Nigeria. 



Barakat et al., Indian Journal of Finance and Banking 9(1) (2022), 213-229 

  

219 
 

  The relationship between corporate governance mechanisms and the performance of insurance companies in 

Pakistan was studied, data were collected from 12-year annual reports for the period 2007-2018, and the results indicated 

that the composition of the Board of Directors, the concentration of ownership, and executive compensation are the most 

influential internal corporate governance on the performance of insurance companies, the composition of the Board of 

Directors and executive wages is linked to a negative relationship with all performance measures, but the concentration of 

ownership has a significantly positive impact on the performance of insurance companies in Pakistan, as well as the size 

and age of variables Positive control over all performance measures while adversely affecting all performance metrics 

(Junaid, Xue, Syed, Ziaullah, & Riffat, 2020). 
  Previous studies have not taken into account the specificity of the Palestinian economy in general and the insurance 

sector in Palestine in particular, in addition to the lack of literature dealing with the impact of institutional factors on the 

financial performance of companies, especially insurance companies. In this article, an analysis of factors that are likely to 

have an impact on the financial performance of insurance companies in Palestine will be addressed taking into account the 

specificity of Palestine’s economic and legal situation. 
 

METHODOLOGY 

The study follows the descriptive analytical approach to identifying the impact of insurance industry factors, institutional 

and corporate governance factors on the financial performance of insurance companies. The sample included 7 insurance 

companies listed in the Palestine inch as shown in table (4.1), based on companies still operating according to the last year 

of the analysis period (2010-2019). With regard to data collection, the study relies on published data on the Palestine Stock 

Exchange as a primary source of information collection on variables, while the World Bank's Global Governance Indicators 

(WGI) website is used to collect indicators of legal system variables, as well as the Palestinian Capital Market Authority to 

obtain a solvency margin variable. 
 

Variables 

Dependent & Independent Variables 

Table 1. Independent and dependent variables 

 
Variables Measurement 

 
Expected effect References  

Independent variables  

Insurance industry factors 

solvency margin Available capital/required capital ratio SM + (Deyganto & Alemu, 

2019) 

Claims Loss Ratio Claims incurred / premiums earned CIR - (Abebe & Abera, 2019) 

Reinsurance dependent Total reinsurance premiums/total written 

premiums 

REIN - (Deyganto & Alemu, 

2019) 

institutional factors 

Big 4 Big 4 is 1, not Big 4 is 0 BIG4 /+-  (Nwoye, Anichebe, & 

Osegbue, 2021) 

Legal system  It is an average of the following set of six: 

Voice and Accountability, Political Stability 

and Absence of Violence/Terrorism, 

Government Effectiveness, Regulatory 

Quality, Rules of Law and Control of 

Corruption. According to the Global 

Governance Indicators website 

LEGAL /+-  (Mare, Dragos, Dragota, & 
Muresan, 2016) 

Corporate Governance Factors 

Board size Decimal logarithm of the number of 

board members 

BSIZE /+-  (Ebere, Ibanichuka, & 

Ogbonna, 2016)  

  
Ownership of board 

members 

Non-shareholder board members/total 

number of board members 

BOWNERSHIP /+-  

Audit Committee Exist  Audit Committee 1, no Audit 

Committee 0 

AUDITCOMM /+-  

Control variables 

Company size Decimal logotherm of total assets SIZE +  (Djunid & Amelia, 2018) 

Independent variables: Financial performance   

Return on assets net profit before tax/total assets ROA    (Mazviona, Dube, & 

Sakahuhwa, 2017) 

Return on equity net profit before tax/total equity ROE    (Batool & Sahi, 2019) 

 

Models 

Two equations used in this research represented the financial performance of companies, as follow: 

Financial performance measured by ROA model: 

ROA=Bα+B1SM+B2CIR+B3REIN+B4BIG4+B5LEGAL+B6BSIZE+B7BOWNERSHIP+ B8AUDITCOMM+B9SIZE + e 



Barakat et al., Indian Journal of Finance and Banking 9(1) (2022), 213-229 

  

220 
 

Financial performance measured by ROE model: 

ROE=Bα+B1SM+B2CIR+B3REIN+B4BIG4+B5LEGAL+B6BSIZE+B7BOWNERSHIP+ B8AUDITCOMM+B9SIZE + e 

Hypotheses 

Model 1 Hypotheses     

H01: There is no statistically significant effect of insurance industry factors on financial performance as measured by return 

on assets in insurance companies listed in Inch Palestine, Sub- hypotheses were: 

H01.1: There is no statistically significant effect of the solvency margin on ROA.  

H01.2: There is no statistically significant effect of the claim loss ratio on ROA.  

H01.3: There is no statistically significant impact of reinsurance dependence on ROA. 

H02: There is no statistically significant effect of institutional factors on financial performance as measured by return on 

assets in insurance companies listed in Inch Palestine, Sub- hypotheses were: 

H02.1: There is no statistically significant effect of Big 4 on ROA.  

H02.2: There is no statistically significant effect of legal system on ROA.  

H03: There is no statistically significant effect of Corporate Governance Factors on financial performance as measured by 

return on assets in insurance companies listed in Inch Palestine, Sub- hypotheses were: 

H03.1: There is no statistically significant effect of Board size on ROA.  

H03.2: There is no statistically significant effect of Ownership of board members on ROA.  

H03.3: There is no statistically significant impact of Audit Committee on ROA. 

Model 2 Hypotheses     

H01: There is no statistically significant effect of insurance industry factors on financial performance as measured by 

return on equity in insurance companies listed in Inch Palestine, Sub- hypotheses were: 

H01.1: There is no statistically significant effect of the solvency margin on ROE.  

H01.2: There is no statistically significant effect of the claim loss ratio on ROE.  

H01.3: There is no statistically significant impact of reinsurance dependence on ROE. 

H02: There is no statistically significant effect of institutional factors on financial performance as measured by return on 

equity in insurance companies listed in Inch Palestine, Sub- hypotheses were: 

H02.1: There is no statistically significant effect of Big 4 on ROE.  

H02.2: There is no statistically significant effect of legal system on ROE.  

H03: There is no statistically significant effect of Corporate Governance Factors on financial performance as measured by 

return on equity in insurance companies listed in Inch Palestine, Sub- hypotheses were: 

H03.1: There is no statistically significant effect of Board size on ROE.  

H03.2: There is no statistically significant effect of Ownership of board members on ROE.  

H03.3: There is no statistically significant impact of Audit Committee on ROE. 

DATA ANALYSIS 

Descriptive Statistics 

Table 2. Descriptive statistics of ratio variables 

 
  ROA ROE SM CIR REIN LEGAL BSIZE SIZE 

Mean 0.0373 0.051 1.6136 0.6351 0.1255 0.3345 0.9091 7.6815 

Median 0.0348 0.1259 1.595 0.65 0.1048 0.3336 0.9031 7.6864 

Maximum  0.1414 0.4901 3.33 0.88 0.3008 0.3589 1.0414 8.2695 

Minimum  -0.1091 -2.452 0.33 0.26 0.0396 0.3101 0.699 7.0386 

Std. Deviation 0.0416 0.4399 0.6209 0.108 0.0621 0.0166 0.0992 0.273 

No. of observation 70 70 70 70 70 70 70 70 



Barakat et al., Indian Journal of Finance and Banking 9(1) (2022), 213-229 

  

221 
 

   The table 2 shows that the average return on assets was 0.0373, with values ranging from (-0.109-0.141), average 

return on equity (0.051) and values ranged from (-2.452-0.490), and average solvency margin (1.6144) Its values ranged 

from (0.33-3.33), averaged claims loss (0.635) and values ranged from (0.26-0.88), average reliance on reinsurance (0.126) 

and values ranged from (0.0396-0.3008),  The average legal system of the state (0.335) ranged in value from (0.3101-

0.3589), the average size of the Board of Directors (0.909) and its values ranged from (0.699-1.0) 41), also averaged the 

ownership of board members (0.3324) and its value ranged from (0-1), the average size of the company (7.6815) and its 

value ranged from (7.0386-8.2695). 

 Table 3 shows the independent-quality variables that take the values of 0 and 1: the big four audit companies and the 

audit committee of the insurance companies in question, which have been calculated from their financial lists, showing the 

numbers and percentages of each of these independent variables. 

 

Table 3. Descriptive statistics of dummy variables 

 
variables Category No.  % 

BIG4 0 (not big 4) 18 25.70% 

  1(big 4) 52 74.30% 

  Sum 70 100.00% 

AUDITCOMM (The absence of an audit 
committee) 0 

13 18.60% 

  (audit committee exist) 1 57 81.40% 

 %100.00 70 المجموع  

 

Unit Root Test 

In order to test the stillness of the CT time series data used in the search, Four types of unit root tests were used: Levin-Lin-

Chu, Lim-Bassaran-Shin Im, Pesaran and Shin W-stat, Fisher-Chi Square-ADF test, Fisher-Chi Square-ADF test, fisher-chi 

Square-PP test, all of which are parameter tests that assume that all-time series are cross-sectionally independent except for 

the last test as it is non-teacher (Hsiao, 2014), all of these tests are based on a zero hypothesis examination that provides for 

the presence of the unit root of the single series in all sections (Cross-sections) and that the data of the CT series are not 

static, and these tests will be used at the original level of series (Level) and at the first difference (First Difference), and 

table 4 shows the results of these tests: 

 

Table 4. Unit Root Test 

 
Variable Test Level First Difference 

Statistic Prob. Statistic Prob. 

ROA Levin-Lin-Chu -3.6494 0.0001 -6.6102 0.0000 

 Im, Pesaran and Shin W-stat -1.6855 0.0460 -2.5781 0.0050 

 Fisher-Chi Square-ADF 24.8247 0.0363 35.1103 0.0014 

 Fisher-Chi Square-PP 54.4640 0.0000 76.5581 0.0000 

ROE Levin-Lin-Chu -3.3969 0.0003 -6.9411 0.0000 

 Im, Pesaran and Shin W-stat -1.2815 0.1000 -2.9805 0.0014 

 Fisher-Chi Square-ADF 21.6950 0.0851 37.4430 0.0006 

 Fisher-Chi Square-PP 47.0663 0.0000 84.6838 0.0000 

SM Levin-Lin-Chu -3.4643 0.0003 -5.5937 0.0000 

 Im, Pesaran and Shin W-stat -0.8764 0.1904 -0.5930 0.2766 

 Fisher-Chi Square-ADF 19.5547 0.1448 22.0967 0.0766 

 Fisher-Chi Square-PP 32.9299 0.0029 46.1509 0.0000 

CIR Levin-Lin-Chu -4.2969 0.0000 -8.0996 0.0000 

 Im, Pesaran and Shin W-stat -2.5097 0.0060 -4.5092 0.0000 

 Fisher-Chi Square-ADF 32.8306 0.0030 47.2937 0.0000 

 Fisher-Chi Square-PP 64.1746 0.0000 76.4233 0.0000 

REIN Levin-Lin-Chu -3.6074 0.0002 -8.1162 0.0000 

 Im, Pesaran and Shin W-stat -1.2426 0.1070 -3.4893 0.0002 

 Fisher-Chi Square-ADF 22.3675 0.0714 42.1663 0.0001 

 Fisher-Chi Square-PP 42.3035 0.0001 86.6944 0.0000 

BIG4 Levin-Lin-Chu -1.6103 0.0537 -4.1886 0.0000 

 Im, Pesaran and Shin W-stat -0.6956 0.2433 -0.7830 0.2168 

 Fisher-Chi Square-ADF 3.4047 0.1823 5.9615 0.0508 

 Fisher-Chi Square-PP 10.0270 0.0066 5.4618 0.0652 

LEGAL Levin-Lin-Chu -5.3542 0.0000 -7.3997 0.0000 

 Im, Pesaran and Shin W-stat -3.1347 0.0009 -3.5487 0.0002 

 Fisher-Chi Square-ADF 38.0266 0.0005 43.0633 0.0001 

 Fisher-Chi Square-PP 37.4467 0.0006 75.6868 0.0000 

BSIZE Levin-Lin-Chu -2.5591 0.0052 -2.2907 0.0110 

 Im, Pesaran and Shin W-stat -0.5289 0.2984 -1.3738 0.0848 

 Fisher-Chi Square-ADF 14.1205 0.1676 21.2023 0.0475 

 Fisher-Chi Square-PP 9.8711 0.4519 35.2133 0.0004 



Barakat et al., Indian Journal of Finance and Banking 9(1) (2022), 213-229 

  

222 
 

BOWNERSHIP Levin-Lin-Chu -1.4091 0.0794 -2.8678 0.0021 

 Im, Pesaran and Shin W-stat -0.6456 0.2593 -2.2513 0.0122 

 Fisher-Chi Square-ADF 15.1496 0.2334 27.8856 0.0057 

 Fisher-Chi Square-PP 24.7325 0.0161 54.4649 0.0000 

AUDITCOMM Levin-Lin-Chu -2.1061 0.0176 -1.8041 0.0356 

 Im, Pesaran and Shin W-stat -0.4811 0.3152 0.2297 0.5908 

 Fisher-Chi Square-ADF 7.8033 0.2529 3.8192 0.7011 

 Fisher-Chi Square-PP 7.1369 0.3084 18.9549 0.0042 

SIZE Levin-Lin-Chu -3.6494 0.0001 -6.6102 0.0000 

 Im, Pesaran and Shin W-stat -1.6855 0.0460 -2.5781 0.0050 

 Fisher-Chi Square-ADF 24.8247 0.0363 35.1103 0.0014 

 Fisher-Chi Square-PP 54.4640 0.0000 76.5581 0.0000 

 

  It is noted from the results of the unit root tests in the previous table that most of the studied CT time series are 

stable at the original level level where the statistical significance level values are below the 0.05 level for most of the tests 

used, indicating the rejection of the zero hypothesis that the unit root exists, It is also clear that all studied CT time series 

are stable at first difference, where statistical significance level values are below 0.05 for most tests used in all variables,  It 

also refers to the rejection of the zero hypothesis that the root of the unit exists, and therefore concludes that the CT time 

series used in this research can be self-related and first-class integrated (Integrated of order 1) I(1)." 

 

Panel Cointegration Test 

In order to examine the possibility of an complementary relationship between the study variables used in the research, The 

combined simultaneous integration test of ct time series called Kao Residual Cointegration Test (Hsiao, 2014), where the 

zero hypothesis of this test states that the trumpet chain does not remain silent and that there is no common integration 

relationship between variables, and the rejection of the zero hypothesis in this test indicates that the study variables grow at 

the same pace in the long term, indicating the existence of a common integration relationship between variables. A long-

term balance relationship that binds variables together, and Table 5 shows the results of the joint simultaneous integration 

test of CT time series by the two equations of the study: 

 

Table 5. Panel Cointegration Test 

 
Variables in Equation t-statistic Prob. 

Model 1: -4.896 0 

 ROA, SM, CIR, REIN, BIG4, LEGAL, BSIZE, BOWNER, 

AUDITCOMM, SIZE  

Model 2: -3.6351 0.0001 

 ROE, SM, CIR, REIN, BIG4, LEGAL, BSIZE, BOWNER, 
AUDITCOMM, SIZE  

  

 The results of the CT integration test note that the level of indication for the simultaneous joint integration of CT time 

series is less than 0.05 for the first and second study models, and therefore the zero hypothesis that the trumpet sequence 

does not remain silent and that there is no common integration relationship between the variables, and therefore concludes 

that the boki sequence is static and stable for the two equations of the study, indicating a long-term common integration 

relationship between the model variables of the study proposed by the researcher. 

 

Multicollinearity Test 

Table 6. Multicollinearity Test Probability 
 

Correlation  ROA ROE SM CIR REIN BIG4 LEGAL BSIZE BOWNER AUDITCOMM 

Probability 

ROA 1                   

-----                   

ROE 0.7498 1                 

0 -----                 

SM 0.505 0.3909 1               

0 0.0008 -----               

CIR -0.205 -0.1485 -0.087 1             

0.0887 0.2199 0.474 -----             

REIN 0.1475 0.0083 0.4094 0.0359 1           

0.223 0.9459 0.0004 0.768 -----           

BIG4 0.0746 -0.0826 0.1742 0.1471 0.1891 1         

0.5392 0.4967 0.1493 0.2243 0.1168 -----         

LEGAL 0.0918 -0.0118 0.0241 -0.1415 0.0418 0.0185 1       

0.4497 0.9228 0.8431 0.2427 0.7309 0.8792 -----       

BSIZE 0.1296 -0.133 0.1086 0.1321 0.0937 0.6875 0.0241 1     

0.2851 0.2723 0.3706 0.2756 0.4403 0 0.8429 -----     

BOWNER 0.0288 0.0125 0.0239 -0.0334 -0.1941 0.1274 -0.0547 -0.0639 1   

0.8128 0.9184 0.8442 0.7839 0.1074 0.2931 0.6531 0.599 -----   



Barakat et al., Indian Journal of Finance and Banking 9(1) (2022), 213-229 

  

223 
 

AUDITCOMM 0.2696 0.034 0.0588 0.0503 -0.0667 0.2233 -0.1372 0.2599 0.1008 1 

0.024 0.7797 0.6288 0.6792 0.583 0.0631 0.2575 0.0298 0.4063 ----- 

SIZE 0.3137 0.388 0.3489 0.2822 0.4616 0.0567 -0.2007 -0.0662 -0.2336 0.1566 

0.0082 0.0009 0.0031 0.0179 0.0001 0.6411 0.0958 0.586 0.0517 0.1955 

         

  The table 6 shows that there are no statistically function links between most independent variables, The highest 

correlation between independent variables (0.69) between board size (BSIZE) and big four audit companies (BIG4) was 

statistically lower at 0.05 (statistical indication level less than 0.05), followed by the Association between Total Assets 

(SIZE) and Rein dependency factor of 0.46, a statistical function at 0.05,  Followed by the ratio between solvency margin 

(SM) and rein dependency at 0.41, which is statistically lower at 0.05, The correlation between total assets (SIZE), solvency 

margin (SM) and claims loss ratio (CIR) was 0.35 and 0.28 respectively, a statistical function at 0.05, and the auditcomm 

link factor and board size (BSIZE) were statistically at 0.05. 

 

Variance inflation factors (VIF) Test 

To ensure that there is no linear bonding problem, VIF transactions have been calculated for all independent variables that 

appear in the table 7, as it is clear that all contrast inflation coefficients are less than 10, indicating that the estimated study 

models are free of linear bonding problem (Gujarati & Porter, 2009). 

 
Table 7. Variance inflation factors (VIF) Test 

 
Variables Variance inflation factors  

SM  1.3670 

CIR  1.2071 

REIN  1.5424 

BIG4  2.1637 

LEGAL  1.0962 

BSIZE  2.2201 

BOWNER  1.2456 

AUDITCOMM  1.2037 

SIZE  1.8549 

 

The Durban-Watson autocorrelation test 

Table 8. The Durban-Watson autocorrelation Test 

 
Model d-statistic dU Null Hypothesis Decision for Null 

Hypothesis 

Panel Model 1 1.7741 1.91 No Autocorrelation Rejection if 

d < dU 

  
Panel Model 2 1.6474 

Number of explanatory variables excluding the constant (k= 9) 

Number of included observations (n=70) 

   

  Through the results of the Derben-Watson test, it is clear that the value of the Derben-Watson test statistic 

(d=1.7741) for the first equation and (d=1.6474) for the second equation, both smaller than the great scheduling value 

(dU=) 1.910) At the indication level of 0.05, the zero hypothesis that there is no self-association between the boundaries 

of the trumpet sequence is rejected, thus concluding that there is a problem of the self-bonding of the trumpet matrix in 

the two equations of the study. 

  To ensure that there is no heteroskedasticity problem for the Residuals matrix, the White's General 

Heteroscedasticity Test will be used to test the zero hypothesis that the contrast of the error boundaries is all equal or 

homogeneous  (Gujarati & Porter, 2009), table 9 shows the results of this test on the two study models based on the results 

of the estimate using the micro-box method: 

 

Table 9. Heterogeneity Test 

 
Model  White’s test statistic(n* R2) Degrees of Freedom Tabulated Chi-Square 

Panel Model 1 70*0.4295=30.065  9 16.919 

Panel Model 2 70*0.3785=26.495  

Number of the Regressors excluding the constant (k= 9) 

Number of included observations (n=70) 

   

  Through the results of the contrast homogeneity test, it is clear that the test value (30.065) of the first equation and 

(26.495) of the second equation, both greater than the table value (Chi-square=16.919) at the indication level 0.05, is 

therefore rejected the zero hypothesis that the difference in the boundaries of the error is all equal, thus concluding that the 

problem of inequality in the two equations of the study is rejected. 

  In order to solve the problems of self-association and heterogeneity of variability, the two equations of the study 

will be re-estimated by a special method of Estimated Generalized Least Squares (EGLS) or Feasible Generalized Least 



Barakat et al., Indian Journal of Finance and Banking 9(1) (2022), 213-229 

  

224 
 

Squares (FGLS), as suggested by Hsiao (2014), which adjusts the standard error matrix of capacities in the manner of the 

usual micro-squares (Gujarati & Porter, 2009) and (Greene, 2018). 

 

Hausman Random Effects Test 

Table 10. Hausman random effects test 

 
Model Test Type Chi-Sq. Statistic d.f. Prob.  

Panel Model 1 Period random 3.7371 8 0.88 

Panel Model 2 Period random 11.1332 8 0.1943 

   

 It is clear from the results of the Haussmann random impact model test that the level of test indication for the first 

equation (0.88) and the second equation (0.1943), both of which are greater than the 0.05 indication level, and accordingly 

the zero hypothesis that the random impact model is the best and most appropriate for data analysis is accepted, The random 

impact model will therefore be used to estimate the two equations of the study as the random impact of the period random 

and the impact for ct units is cross-section. Fixed) because the number of CT units studied (insurance companies) is small 

and is lower than the number of independent variables to be studied their impact on the dependent variable (Gujarati & 

Porter, 2009). 

 

Normality of Residuals Test 

Table 11. Normality of Residuals Test 

 
Sample 

 
Jarque-Bera Statistic P-Value 

Panel Model 1 5.0927 0.0783 

Panel Model 2 209.319 0 

  

  From the results of table 11, it is noted that the level of indication of the natural distribution of the Residuals chain 

to offset the first regression model is equal to 0.0783, which is greater than 0.05, which indicates the acceptance of the zero 

hypothesis that assumes that the trumpets are naturally distributed to the first study model, The value of the level of 

indication of the natural distribution of the trumpet chain to offset the second study model was 0.000, which is less than 

0.05, which indicates the rejection of the zero hypothesis that the trumpets are naturally distributed for the second study 

model,  Based on the central end theory and considering that the size of the study sample is large (at least 5 views per 

independent variable by Bentler and Chou (1987), the emergence of the problem of the natural distribution of the trumpet 

sequence here does not affect the results of the study, especially since the level of test indication (Jarque-Bera) becomes 

0.236 after the deletion of three abnormal values from the trumpet chain (Gujarati & Porter,  2009). 

 

Regression Analysis 

Model 1 Regression Analysis 

 

 

     

 

 

  

 

 

 

 

 

 

 

 

 

 

  Regression analysis of model 1  shows the results of the estimate of the first regression equivalency model using ROA as a 

dependent variable and as a measure of financial performance, and notes from the table results that there is a positive and s tatistically 

significant impact on financial performance as measured by return on assets for each solvency margin, legal system, board size and 

company size, and notes that there is a negative and statistically significant impact on financial performance as measured by  return on 

assets for each claim loss ratio,  The big four audit companies and the ownership of the board members, and the results did not show a 

statistically significant impact on both the audit committee and the reinsurance of financial performance as measured by the return on 

assets. The calculated F value (4.791) and the prob.=0.000 level, which is below the level of 0.05, This indicates the appropriateness of 

the regression model used and proposed in measuring the impact on financial performance as measured by return on assets (ROA) , and 

Dependent Variable: ROA   
Method: Panel EGLS (Period random effects)  

Sample: 2010 2019 , Periods included: 10 , Cross-sections included: 7 

Total panel (balanced) observations: 70  
White period standard errors & covariance (d.f. corrected) 

Variable Dependent Variable: ROA 

 Coefficient Std. Error t-Statistic Prob. 

C -1.069409 0.495872 -2.156625 0.0355 

SM 0.026795 0.011504 2.329245 0.0236 

CIR -0.103195 0.048344 -2.134576 0.0374 

REIN 0.106544 0.141647 0.752180 0.4552 

BIG4 -0.036687 0.013045 -2.812300 0.0068 

LEGAL 0.464623 0.214546 2.165607 0.0348 

BSIZE 0.149580 0.052973 2.823698 0.0066 

BOWNER -0.038594 0.013337 -2.893798 0.0055 

AUDITCOMM 0.011378 0.012943 0.879047 0.3833 

SIZE 0.111315 0.052129 2.135373 0.0373 

statistic=4.791 Prob.= 0.000-= 0.452 F2=0.571 Adj.R2R 



Barakat et al., Indian Journal of Finance and Banking 9(1) (2022), 213-229 

  

225 
 

the value of the selection factor (0.571R2=) indicating the interpretive capacity of the estimated study model, i.e. the independent variables  

studied and used in the assessment of the study model are all responsible for interpreting 57.1% of the change in financial p erformance as 

measured by the return on assets. 

 

Model 2 Regression Analysis 

 

Dependent Variable: ROE   

Method: Panel EGLS (Period random effects)  

Sample: 2010 2019 , Periods included: 10 , Cross-sections included: 7 

Total panel (balanced) observations: 70  

White cross-section standard errors & covariance (d.f. corrected) 

Variable Dependent Variable: ROE 

 Coefficient Std. Error t-Statistic Prob. 

C -10.162260 2.172096 -4.678553 0.000000 

SM 0.253006 0.092418 2.737636 0.008400 

CIR -0.926265 0.261648 -3.540123 0.000800 

REIN -0.924052 1.247308 -0.740837 0.462000 

BIG4 -0.238229 0.302386 -0.787831 0.434200 

LEGAL 2.309334 2.528019 0.913495 0.365000 

BSIZE 0.602263 0.521700 1.154425 0.253400 

BOWNER -0.303591 0.348703 -0.870629 0.387800 

AUDITCOM

M 

-0.103913 0.040502 -2.565649 0.013100 

SIZE 1.243480 0.236898 5.249011 0.000000 

statistic=3.461 Prob.= 0.000-= 0.348 F2=0.490 Adj.R2R 

      Regression analysis of model  2  shows the results of the estimate of the second regression equivalency model using the 

return on equity as a dependent variable and as a measure of financial performance. The table results show that there is a 

statistically positive and significant impact on financial performance as measured by return on equity for both the solvency 

margin (SM) and the size of the company, and notes that there is a negative and statistically significant impact on financial 

performance as measured by the return on the property rights of both the loss of claims, and the Audit Committee,  There is 

a statistically significant impact on both reinsurance, reliability on large audit companies, the legal system, the size of the 

Board of Directors, and the ownership of board members on financial performance as measured by the return on property 

rights. The calculated F value (3.461) and the level of statistical significance (Prob.=0.000), which is below the level of 

0.05, This indicates the appropriateness of the regression model used and proposed in measuring the impact on financial 

performance as measured by roe, and the value of the selection factor (0.490R2=) indicating the interpretive capacity of the 

estimated study model, i.e. the independent variables studied and used in the assessment of the study model are all 

responsible for interpreting 49% of the change in financial performance measured return on property rights. 

Table 12. Factors affecting performance measured by ROA 

 
Variables effect Studies agree with result Studies do not agree with result 

Insurance industry factors 

Solvency margin Positive (Deyganto & Alemu, 2019) - 

Claims Loss Ratio Negative  (Shawar & Siddiqui, 2019) - 

Reinsurance dependent No effect  (MASC, MMSKB, & SK, 2021) (Kočović, Paunović, & Jovović, 2014) 

Institutional factors 

Big 4 Negative (Gallery, Cooper , & Sweeting, 2008) (Alzharani, Ahmad, & Aljaaidi, 2011) 

Legal system Positive (Dragos, Mare, Dragota, Dragos, & Muresan, 2017) - 

Governance factors 

Board size  Positive (Ibrahim, Ouma, & Koshal, 2019) (Azutoru, Obinne, & Chinelo, 2017) 

Ownership of board 

members 

Negative ( Hsu & Petchsakulwong, 2010) (ALQIREM, ABU AFIFA, SALEH, & 

HANIAH, 2020) 

Audit Committee No effect  (ADEMOLA, MOSES, & UCHEAGWU, 2016) (Ebun, 2019) 

Control variable 

Company size Positive (Berteji & Hammami, 2016) - 

 

 

 

 

 



Barakat et al., Indian Journal of Finance and Banking 9(1) (2022), 213-229 

  

226 
 

Table 13. Factors affecting performance measured by ROE 

 
Variables effect Studies agree with result Studies do not agree with result 

Insurance industry factors 

Solvency margin Positive (Deyganto & Alemu, 2019) - 

Claims Loss Ratio Negative  (Shawar & Siddiqui, 2019) - 

Reinsurance dependent No effect  (MASC, MMSKB, & SK, 2021) (Kočović, Paunović, & Jovović, 2014) 

Institutional factors 

Big 4 No effect  (Alzharani, Ahmad, & Aljaaidi, 2011) (Gallery, Cooper , & Sweeting, 2008) 

Legal system No effect  - (Dragos, Mare, Dragota, Dragos, & 

Muresan, 2017) 

Governance factors 

Board size  No effect  (Azutoru, Obinne, & Chinelo, 2017) (Ibrahim, Ouma, & Koshal, 2019) 

Ownership of board 

members 

No effect  (ALQIREM, ABU AFIFA, SALEH, & HANIAH, 2020) ( Hsu & Petchsakulwong, 2010) 

Audit Committee Negative  

(Ebun, 2019) 

(ADEMOLA, MOSES, & 

UCHEAGWU, 2016) 

Control variable 

Company size Positive (Berteji & Hammami, 2016) - 

 

CONCLUSIONS 

According to the final results achieved through the application of panel data analysis techniques, the factors affecting 

financial performance in the Palestinian insurance market, as illustrated by the two models of the study, are: solvency margin 

and claim loss ratio. In terms of solvency margin, there is a statistically significant positive impact on financial performance, 

as the financial stability of the insurance company is an important criterion for potential customers. A good margin of 

solvency also gives greater confidence to both current and potential clients, creditors, investors and supervisors. The loss of 

claims reflects the potential impact of claims incurred on the return on net assets, in the event of claims that have a negative 

impact on the financial performance of insurance companies. It is an important risk that affects the financial performance 

of insurance companies. With regard to reinsurance, there is no significant impact of reinsurance on the financial 

performance of insurance companies, despite their role in distributing risks, possibly because of the low participation rate 

of the reinsurance providers, possibly resulting from the small percentage of premiums waived by Palestinian insurance 

companies for the benefit of the reinsurance providers. 

  For the institutional factors group, according to the first study model, the results show that each of the four largest 

audit companies and the state's legal system are factors affecting financial performance as measured by return on assets. For 

the big four audit companies, they have a statistically significant negative impact on the financial performance of Palestinian 

insurance companies. Perhaps the negative impact of the big four audit firms on return on assets, due to the many risks 

facing the insurance industry that require hedging to be taken into account, may be that the big four audit firms have a 

greater commitment than local audit firms to international flour and accounting standards, which require hedging and 

adequate allocation. Furthermore, there is a statistically significant positive impact of the legal system on financial 

performance, given the insurance industry's association with both judicial claims and political and security stability. The 

second study model shows that there is no statistically significant impact on the financial performance of each of the big 

four audit companies and the legal system as measured by the return on equity. 

  For the range of governance factors, the results of the first model analysis of the study revealed a statistically 

significant impact on both the size of the Board of Directors and the ownership of board members. In terms of board size, 

it means that the company's financial performance improves when the board size increases. There is a statistically significant 

negative impact on financial performance by the proportion of non-shareholder board members, consistent with the Agency's 

theory. The problem of conflicts of interest between the fundamentals and agents, there is no impact of the Audit Committee 

on the return on assets. The results of the analysis of the second model of the study show a significant negative impact on 

the return on property rights used as a measure of financial performance. The negative impact may be due to the poor 

experience of members of the Audit Committee of Palestinian insurance companies. Furthermore, the results did not show 

a statistically significant impact on the size of the Board and the ownership of council members on the return on property 

rights. As for the controlling factors, the results according to the two study models show a statistically significant positive 

impact on the size of the company with both the return on assets and the return on equity. 

 

RECOMMENDATIONS 

Based on the results above, the researchers recommend the following: 

 The need for Palestinian insurance companies to pay attention to the required solvency margin set by the Palestinian 

Capital Market Authority of 150%, because of their positive and significant impact on the financial performance of 

insurance companies. 

 Palestinian insurance companies should take into account the careful management of claims, which are the largest 

payments in insurance companies, and a careful study of the risks when underwriting insurance policies. 



Barakat et al., Indian Journal of Finance and Banking 9(1) (2022), 213-229 

  

227 
 

 The need to take into account the continuous development and modernization of legislation related to the insurance 

sector for its positive role in the financial performance of insurance companies by the relevant authorities. 

 It is essential that insurance companies take into account the interest in corporate governance, such as increasing the 

number of board members, because of the impact on the diversity of experiences and ideas and the strengthening of 

oversight in the company. Moreover, interest in raising the efficiency of insurance audit committees. 

 

 
Author Contributions: Conceptualization, F.S.Q.B., O.A.R.M., J.H. and M.B.; Data Curation, F.S.Q.B., O.A.R.M., J.H. and M.B.; Methodology, 

F.S.Q.B.; Validation, F.S.Q.B., O.A.R.M., J.H. and M.B.; Visualization, F.S.Q.B., O.A.R.M., J.H. and M.B.; Formal Analysis, F.S.Q.B., O.A.R.M., J.H. 
and M.B.; Investigation, F.S.Q.B.; Resources, F.S.Q.B.; Writing – Original Draft, F.S.Q.B., O.A.R.M., J.H. and M.B.; Writing – Review & Editing, 

F.S.Q.B., O.A.R.M., J.H. and M.B.; Supervision, F.S.Q.B.; Software, F.S.Q.B.; Project Administration, F.S.Q.B.; Funding Acquisition, F.S.Q.B., 

O.A.R.M., J.H. and M.B.. Authors have read and agreed to the published version of the manuscript. 
Institutional Review Board Statement: Ethical review and approval were waived for this study, due to that the research does not deal with vulnerable 

groups or sensitive issues. 

Funding: The authors received no direct funding for this research. 

Informed Consent Statement: Informed consent was obtained from all subjects involved in the study. 

Data Availability Statement: The data presented in this study are available on request from the corresponding author. The data are not publicly available 

due to restrictions. 
Conflicts of Interest: The authors declare no conflict of interest.                                                                                                                                                                                                                                    

 

REFERENCES 

Abebe, A. K., & Abera, M. T. (2019). Determinants of Financial Performance; Evidence from Ethiopia Insurance 

Companies. Journal of Accounting, Finance and Auditing Studies, 5(1), 155-172. 

Adekunle, A. S., & Stephen, A. S. (2017). Reinsurance and Performance of the Ceding Companies: The Nigerian 

Insurance Industry Experience. Economics and Business, 31(1), 19-29. 

Anderloni, L., Moro, O., & Tanda, A. (2020). Governance and Performance in Insurance Companies: A Bibliometric 

Analysis and A Meta-Analysis. International Journal of Economics and Finance, 12(11), 1-1. 

Azutoru, I. C., Obinne, U. G., & Chinelo, O. O. (2017). Effect of Corporate Governance Mechanisms on Financial 

Performance of Insurance Companies in Nigeria. Journal of Finance and Accounting, 5(3), 93-103. 

Batool, A., & Sahi, C. A. (2019). Determinants of Financial Performance of Insurance Companies of USA and UK 

During Global Financial Crisis (2007 – 2016). International Journal of Economics and Business 

Administration, 5(1), 23-33. 

Berhe, T. A., & Kaur, J. (2017). Determinants of insurance companies’ profitability Analysis of insurance sector in 

Ethiopia. International Journal of Research in Finance and Marketing (IJRFM), 7(4), 124-137. 

Bentler, P. M., & Chou, C. P. (1987). Practical issues in structural modeling. Sociological methods & research, 16(1), 

78-117. 

Birjandi, H., Hakemi, B., & Sadeghi, M. M. M. (2015). The study effect agency theory and signaling theory on the level 

of voluntary disclosure of listed companies in Tehran Stock Exchange. Research Journal of Finance 

and Accounting, 6(1), 174-185. 

Cudiamat, A., & Siy, J. S. (2017). Determinants of Profitability in Life Insurance Companies: Evidence from the 

Philippines. Essays in Economics and Business Studies, 42(5), 165-175. 

Daare, W. J. (2016). Determinants Of Non-Life Insurance Companies Profitability: An Empirical Study In India. 

International Journal of Innovative Research and Advanced Studies (IJIRAS), 3(13), 6-11. 

Dakhlallh, M. M., Rashid, N. N., Abdullah, W. A., & Dakhlallh, A. M. (2019). The Mediating Effect of the Managerial 

Ownership towards the Influence of the Board of Directors on the Firm Performance among Jordanian 

Public Shareholders Companies. Journal of Environmental Treatment Techniques, 7(3), 760-767. 

Dakhlallh, M. M., Rashid, N., Abdullah, W. A. W., & Al Shehab, H. J. (2020). Audit committee and Tobin's Q as a 

measure of firm performance among Jordanian companies. Jour of Adv Research in Dynamical & 

Control Systems, 12(1), 28-41. 

Deyganto, K. O., & Alemu, A. A. (2019). Factors Affecting Financial Performance of Insurance Companies Operating 

in Hawassa City Administration, Ethiopia. Universal Journal of Accounting and Finance, 7(1), 1-10. 

DiMaggio, P., & Pawell, W. (1983). the iron cage revisited; institutional isomorphism and collective rationality in 

organizational feilds. American sociological review, 48(2), 147-160. 

Djunid, A., & Amelia, F. (2018). Effect of Biological Asset Intensity, Company Size, Ownership Concentration, and 

Type Firm against Biological Assets Disclosure. The Indonesian Journal of Accounting Research, 

21(1), 121-146. 

Dragos, S. L., Mare, C., Dragota, I. M., Dragos, C. M., & Muresan, G. M. (2017). The nexus between the demand for 

life insurance and institutional factors in Europe: new evidence from a panel data approach. Economic 

Research-Ekonomska Istraživanja, 30(1), 1477–1496. 

Dube, S., & Maroun, W. (2017). Corporate social responsibility reporting by South African mining companies: 

Evidence of legitimacy theory. S.Afr.J.Bus.Manage, 48(1), 23-34. 



Barakat et al., Indian Journal of Finance and Banking 9(1) (2022), 213-229 

  

228 
 

Ebere, C. C., Ibannichuka, E., & Ogbonna, G. (2016). Corporate Governance System and Financial Performance of 

Quoted Insurance Companies in Nigeria. International Journal of Business & Law Research, 4(4), 

34-41. 

Farouk, M. A., & Hassan, S. U. (2014). Impact of Audit Quality and Financial Performance of Quoted Cement Firms 

in Nigeria. International Journal of Accounting and Taxation, 2(2), 01-22. 

Gour, B., & Gupta, M. C. (2012). A review on solvency margin in Indian insurance companies. International Journal 

of Recent Research and Review, 2(1), 43-47. 

Greene, W. (2018). Econometric analysis. . India: Pearson Education. 

Gujarati, D., & Porter, D. (2009). Basic econometrics (ed.). Singapore: McGrew Hill Book Co. 

Habtoor, O. S. (2021). The Influence of Board Ownership on Bank Performance: Evidence from Saudi Arabia. Journal 

of Asian Finance, Economics and Business, 8(3), 1101–1111. 

Harrison, J., Freeman, R., & Sá de Abreu, M. C. (2015). Stakeholder Theory As an Ethical Approach to Effective 

Management: applying the theory to multiple contexts. Review of Business, 17(55), 858-869. 

Hsiao, C. (2014). Analysis of panel data (No. 54). Cambridge: university press. 

Huang, Y., Ouyang, Y., Tang, L., & Zhou, J. (2018). Robust optimal investment and reinsurance problem for the product 

of the insurer’s and the reinsurer’s utilities. Journal of Computational and Applied Mathematics, 344, 

532-552. 

Johny, M., Purwoko, B., & Merawaty, E. E. (2021). Effect of Gross Premiums, Claims Reserves, Premium Reserves, 

and Payment of Claims to ROA (A Survey Of General Insurance Companies Is Recorded In IDX). 

International Journal of Economics, Management, Bussiness and Social Science (IJEMBIS), 1(1), 31-

43. 

Ishtiaq, N., & Siddiqui, D. A. (2019). FACTORS AFFECTING FINANCIAL PERFORMANCE OF LIFE 

INSURANCE SECTOR IN PAKISTAN. International Journal of Social and Administrative 

Sciences, 4(2), 178-199. 

Junaeni, I. (2017). Pengaruh EVA, ROA, DER dan TATO terhadap Harga Saham pada Perusahaan Makanan dan 

Minuman di BEI. Owner: Riset Dan Jurnal Akuntansi, 1(2), 32-47. 

Junaid, M., Xue, Y., Syed, M. W., Ziaullah, M., & Riffat, N. (2020). Corporate governance mechanism and performance 

of insurers in Pakistan. Green Finance, 2(3), 243–262. 

Kaya, E. Ö. (2015). The Effects of Firm-Specific Factors on the Profitability of Non-Life Insurance Companies in 

Turkey. International Journal of Financial Studies, 3(4), 510-529. 

Koc, I. O. (2016). Determining Factors in Financial Performance of Publicly Traded Insurance Companies at Istanbul 

Stock Exchange. International Journal of Business and Social Science, 7(11), 169-177. 

Kočović, J., Paunović, B., & Jovović, M. (2014). Determinants of business performance of non-life insurance companies 

in Serbia. Ekonomika preduzeća, 62(7-8), 367-381. 

Lanis, R., & Richardson, G. (2012). Corporate social responsibility and tax aggressiveness: a test of legitimacy theory. 

Accounting, Auditing & Accountability Journal, 26(1), 75-100. 

Lei, Y. (2019). Reinsurance and Insurers’ Risk‐Return Profile. Journal of Insurance Issues, 42(1), 1–29. 

Mare, C., Dragos, S. L., Dragota, I. M., & Muresan, G. M. (2016). SPATIAL CONVERGENCE PROCESSES ON 

THE EUROPEAN UNION’S LIFE INSURANCE MARKET. Economic Computation and Economic 

Cybernetics Studies and Research, 50(4), 93-107. 

Mazviona, B. W., Dube, M., & Sakahuhwa, T. (2017). An Analysis of Factors Affecting the Performance of Insurance 

Companies in Zimbabwe. Journal of Finance and Investment Analysis, 6(1), 11-30. 

Meyer, J., & Rowan, B. (1977). Institutionalized Organizations: Formal Structure as Myth and Ceremony. The American 

Journal of Sociology, 83(2), 340-363. 

Miles, S. (2017). Stakeholder Theory Classification, Definitions and Essential Contestability (Vol. 1). Bingley: Emerald 

Publishing Limited. 

Mogro, S. C., & Barrezueta, N. B. (2019). Determinants of profitability of life and non-life insurance companies: 

evidence from Ecuador. International Journal of Emerging Markets, 14(5), 831-872. 

Morara, K., & Sibindi, A. B. (2021). Assessing the Solvency, Underwriting Risk and Profitability of the Kenyan 

Insurance Sector. AUDOE, 17(5), 226-240. 

Mousa, G. A., & Hassan, N. T. (2015). Legitimacy Theory and Environmental Practices: Short Notes. International 

Journal of Business and Statistical Analysis, 2(1), 41-53. 

Nwoye, M. C., Anichebe, A. S., & Osegbue, I. F. (2021). Effect of Audit Quality on Earnings Management in Insurance 

Companies in Nigeria. Journal of Business & Economics, 7(2), 173-202. 

Olalekan, L. I. (2018). Effect of liquidity risk, premium growth on the performance of quoted insurance firms in Nigeria: 

A panel data analysis. American Finance & Banking Review, 2(1), 44-53. 

Osho, A. E., & Ayorinde, F. M. (2018). The General Tenets of Positive Accounting Theory Towards Accounting 



Barakat et al., Indian Journal of Finance and Banking 9(1) (2022), 213-229 

  

229 
 

Practice and Disclosure in Corporate Organizations in Nigeria. Journal of Economics and Sustainable 

Development, 9(20), 1-11. 

Pant, S., & Bahadur KC, F. (2019). INSTITUTIONAL AND EXTERNAL ENVIRONMENT AFFECTING 

DEVELOPMENT OF INSURANCE INDUSTRY IN NEPAL. Nepal Journal of Multidisciplinary 

Research (NJMR), 2(1). 

Puspitasari, E., Sudiyatno, B., Hartoto, W. E., & Widati, L. W. (2021). Net Interest Margin and Return on Assets: A 

Case Study in Indonesia. Journal of Asian Finance, Economics and Business, 8(4), 0727–0734. 

Panda, B., & Leepsa, N. (2017). Agency theory: Review of Theory and Evidence on Problems and Perspectives. Indian 

Journal of Corporate Governance, 10(1), 74-95. 

Qoyum, A., Setyono, J., & Qizam, I. (2017). The Impact of Good Corporate Governance, Company Size Nn Corporate 

Social Responsibility Disclosure: Case Study of Islamic Banking in Indonesia. Iqtishadia: Jurnal 

Kajian Ekonomi dan Bisnis Islam STAIN Kudus, 10(1), 103-159. 

Rae, R., Barrett, A., Brooks, D., Chotai, M., & Pelkiewicz, A. (2018). A review of Solvency II: Has it met its objectives? 

British Actuarial Journal, 23(4), 1–72. 

Rahman, M. M., Meah, M. R., & Chaudhory, N. U. (2019). The Impact of Audit Characteristics on Firm Performance: 

An Empirical Study from an Emerging Economy. Journal of Asian Finance, Economics and Business, 

6(1), 59-69. 

Sankhla, B. (2021). Research Paper on Corporate Governance, Norms and Growth of Life Insurance Sector in India. 

International Journal of Innovative Science and Research Technology, 6(2), 314-319. 

Scott, W. R. (2008). Approaching Adulthood: The Maturing of Institutional Theory. Theory and Society, 37(5), 427-

442. 

Smith, A. (1776). An Inquiry into the Nature and Causes of the Wealth of Nations (New York: Modern Library, 1937). 

Book, 3, 356-396.   

Sofia, P., & Avianti, I. (2019). Influence of Internal Control Activities And Characteristics Of Audit Committee On The 

Quality Of Audit Implementation ByA Public Accounting Firm. Jurnal Akuntansi, XXIII(1), 97-112. 

Suchman, M. C. (1995). Managing Legitimacy: Strategic and Institutional Approaches. The Academy of Management 

Review, 20(3), 571-610. 

Tarsono, O., Ardheta, P. A., & Amriyani, R. (2019). The Influence of Net Premium Growth, Claim Ratio and Risk-

Based Capital on the Financial Performance of Life Insurance Companies. Advances in Economics, 

Business and Management Research, 127, 65-68. 

 

 
 

Publisher’s Note: CRIBFB stays neutral with regard to jurisdictional claims in published maps and institutional affiliations. 

 

 

© 2022 by the authors. Licensee CRIBFB, USA. This article is an open access article distributed under the terms and conditions of the Creative Commons 

Attribution (CC BY) license (http://creativecommons.org/licenses/by/4.0/). 
 

Indian Journal of Finance and Banking (P-ISSN 2574-6081 E-ISSN 2574-609X) by CRIBFB is licensed under a Creative Commons Attribution 4.0 

International License. 

http://creativecommons.org/licenses/by/4.0/)
http://creativecommons.org/licenses/by/4.0/
http://creativecommons.org/licenses/by/4.0/

