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Authors
Okparaka, Vincent Chukwuka (Ph.D.) 1 & Obodo, Chukwuebuka Valentine 2
1 & 2 Department of Insurance and Risk Management,
Faculty of Management Sciences,
Enugu State University of Science and Technology, (ESUT), Enugu State, Nigeria.
Abstract
Research Objectives: The study examined the effect of financial risk on the performance of insurance firms in Nigeria. Specifically, the study examined the effect of liquidity risk on return on asset of insurance firms in Nigeria; and assessed the effect of solvency risk on return on asset of insurance firms in Nigeria.
Methodology: The data employed for the study were time series data, and were sourced from financial publication of the Insurance industries under review. The panel least square multiple regression model was used in analyzing the data.
Findings: Liquidity risk with a p-value of 0.9871 is greater than the level of significance at 0.05 which means that it has no significant effect on return on asset of insurance companies in Nigeria; Solvency risk on the same hand has a p-value 0.7451 which is also greater than the level of significance at 0.05 and thus has no significant effect on return on asset of insurance companies in Nigeria.
Conclusion: Liquidity and solvency risk have no significant effect on the performance of insurance companies in Nigeria.
Recommendation: Insurance firms should forestall solvency risk challenges by moderately widening their bond portfolio, considering that it remains relatively stable.
Key words: Insurance, Financial risk, Liquidity risk, Solvency risk, Return on asset.
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