Impact of Macroeconomic Variables on the Performance of State-owned Insurance Companies in Bangladesh

Abstract

The aim of this study is to investigate the impact of some selected macroeconomic variables on the performance of state-owned insurance companies operating in Bangladesh. The state-owned companies are observed from the year of 2013 to 2022. In this study, we have used five performance measures such as Net Profit Margin, Solvency Ratio, Claim/ Loss Ratio, Underwriting/Gross Profit Ratio and Dividend pay-out Ratio as dependent variables. The explanatory variables used in this study are categorized as macroeconomic factors such as GDP growth rate, inflation rate, employment rate and interest rate. Firm-specific factors such as the age of the firms, firm size (measured as total asset), net premium are used as control variables. The research employs Pooled Ordinary Least Square (POLS) Regression to investigate the impact of macroeconomic variables on the performance of the state-owned insurance companies. The results of our study suggest that interest rate has significant impact on the performance of state-owned insurance companies. Also, the size of the company has statistically significant impact on the performance of the companies. So, the interest rate along with firm size have been considered as important determinants of the performance of the state-owned insurance companies in Bangladeshi. The findings of the study are expected to be useful for the investors in making decisions while selecting stocks of insurance companies and policymakers can also use the findings to formulate policies aiming at economic development of the country.