Micro-specific Profitability Factors of the Serbian Insurance Industry: A Panel Data Estimation

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dc.contributor.authorVojinović, Željko
dc.contributor.authorMilutinović, Sunčica
dc.contributor.authorLeković, Bojan
dc.contributor.otherEkonomická fakultacs
dc.date.accessioned2020-04-06T13:38:24Z
dc.date.available2020-04-06T13:38:24Z
dc.description.abstractThe paper investigates the main micro-specific profitability determinants of the insurance industry in Serbia, covering the period 2008–2016. Data set includes accounting ratios for 19 universal insurers, officially reported by the National Bank of Serbia (NBS). We have estimated the fixed effects model using the OLS and GLM estimation procedures, with return on asset (ROA), return on equity (ROE) and return on total premium (ROTP) as the response variables. The estimated results from different models are quite consistent, with some minor deviations related mainly to the magnitude of the effects. Specifically, there is a trade-off between liquidity and profitability, and the insurance companies exploit economies of scale extensively. Loss and risk exposure have significant adverse effect on profitability, while productivity proved to be not significant. In addition, the relative market power (market position) and size have significant positive impact on profitability, while business specialization favors insurance over reinsurance, particularly the life-insurance business, as well as the business specialization dummies (insurance vs. reinsurance, life vs. non-life insurance). Consequently, an optimal profitability strategy should be based on mergers and acquisitions, appropriate risk-taking and risk-management practices, and business sophistication through specialization. In addition, the companies should weight costs and benefits of keeping an excess of liquid reserves. The results also indicate further market concentration due to the size effects, and it could result in higher prices and lower quality of the services. This in turn imposes the new regulatory challenges in terms of the optimal antitrust strategy and appropriate quality control. The implications of these findings are applicable to other Western Balkan countries, especially to Bosnia and Herzegovina and Macedonia.en
dc.formattext
dc.identifier.doi10.15240/tul/001/2020-1-010
dc.identifier.eissn2336-5604
dc.identifier.issn1212-3609
dc.identifier.urihttps://dspace.tul.cz/handle/15240/154706
dc.language.isoen
dc.publisherTechnická Univerzita v Libercics
dc.publisherTechnical university of Liberec, Czech Republicen
dc.publisher.abbreviationTUL
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dc.relation.ispartofEkonomie a Managementcs
dc.relation.ispartofEconomics and Managementen
dc.relation.isrefereedtrue
dc.rightsCC BY-NC
dc.subjectinsurance marketen
dc.subjectprofitability determinantsen
dc.subjectpanel data estimationen
dc.subject.classificationG2
dc.subject.classificationG22
dc.titleMicro-specific Profitability Factors of the Serbian Insurance Industry: A Panel Data Estimationen
dc.typeArticleen
local.accessopen
local.citation.epage155
local.citation.spage135
local.facultyFaculty of Economics
local.filenameEM_1_2020_10
local.fulltextyes
local.relation.abbreviationE+Mcs
local.relation.abbreviationE&Men
local.relation.issue1
local.relation.volume23
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