Effect of Liquidity Management on the Financial Performance of Insurance Companies in Kenya
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Date
2019Author
Kipngetich, Ronoh M
Type
ThesisLanguage
enMetadata
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Since profitability is significantly affected by liquidity management, companies have opted for complex and rigorous programs to cope with their affairs. The core purpose of this research study was to establish the influence of liquidity management on insurance corporations’ financial performance in Kenya. The Liquidity Preference Theory, the Shiftability Theory, and the Modern Portfolio Theory guided the study. 47 licensed insurance firms made up the research population. Only secondary data from the NSE and AKI websites was gathered for the research. The data included annual liquidity ratio for insurance companies and the annual ROA. The study covered a 5-year period from 2014-2018. SPSS V 25.0 was employed in generating quantitative data. Tables, frequencies and percentages were used in exhibiting the research results. Statistical assumptions tests were done. The study recorded that Liquidity jointly impacted insurance corporations’ financial performance in Kenya. The outcomes indicated that when predictor variables are constantly held, financial metric indicator is 0.831, the research showed that increasing asset quality results in a rise of profitability by 0.636, furthermore, it was recorded that a rise in management of liquidity increased financial performance by 0.721, an expansion of capital adequacy grows financial performance by 0.701 and an increase in the size of firms increases financial performance by 0.523. The study made the recommendation that IRA needs to formulate new requirements of liquidity since it will contribute to an upward impact on insurance firms’ earnings and promote economic stability. Insurance companies which play a critical role in protecting businesses and individuals from adverse events and earn their revenues primarily from premiums and investment income form a critical part of the financial system hence the study recommended that a well-coordinated regulatory approach across countries and regions will also ensure that systemic risk, where the failure of one insurance company creates a contagion effect, is mitigated given the inter-linkages between financial organizations in a globalized system
Publisher
University of Nairobi
Rights
Attribution-NonCommercial-NoDerivs 3.0 United StatesUsage Rights
http://creativecommons.org/licenses/by-nc-nd/3.0/us/Collections
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