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Another look at risk-based capital regime, capital structure, insurer's risk profile and performance: a conceptual paper

This paper evaluates capital structure under risk-based capital regime from the perspective of insurance firms and its performance. It also evaluates the moderating effect of insurer’s risk profile on capital-performance relationship. The authors aim to reveal ambiguities, gaps and omissions in the...

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Main Authors: Akpan, Sunday Sunday, Mahat, Fauziah, Amin Noordin, Bany Ariffin, Md Nassir, Annuar
Format: Conference or Workshop Item
Language:English
Published: Faculty of Economics and Management, Universiti Putra Malaysia 2017
Online Access:http://psasir.upm.edu.my/id/eprint/58694/1/4-Sunday_Akpan.pdf
http://psasir.upm.edu.my/id/eprint/58694/
http://www.econ.upm.edu.my/upload/dokumen/20170802183103007-Sunday_Akpan.pdf
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spelling my.upm.eprints.586942018-01-29T09:27:55Z http://psasir.upm.edu.my/id/eprint/58694/ Another look at risk-based capital regime, capital structure, insurer's risk profile and performance: a conceptual paper Akpan, Sunday Sunday Mahat, Fauziah Amin Noordin, Bany Ariffin Md Nassir, Annuar This paper evaluates capital structure under risk-based capital regime from the perspective of insurance firms and its performance. It also evaluates the moderating effect of insurer’s risk profile on capital-performance relationship. The authors aim to reveal ambiguities, gaps and omissions in the literature and to sketch avenues for future research. A conceptual framework for capital structure under risk-based capital era and its application is suggested focusing on equity, technical provision and required risk propensity for maximizing profit and wealth for all stakeholders. The research reviews that capital structure of insurers differs from non-insurance firms as such risk-based capital regulation must not only focus on the various types of risk but also recognized these differences. It is shown that insurers’ capital structure contains equity and technical provisions which comprises creditors and accruals, outstanding claims and insurance funds instead of equity and financial debt as it is with conventional non insurance firms. This study thus stressed that for capital structure to best explain performance of insurers, it must be measured by equity ratio and technical provision ratio in place of debt ratio and corporate risk profile (quantitative and qualitative) must enter its sequence of performance relational analysis and effectiveness equations. We stressed further that only with the proposed conceptual framework would a holistic understanding of insurer’s capital structure be achieved while the observed contradictory and inconclusive empirical findings on capital structure and firm performance could be resolved. Faculty of Economics and Management, Universiti Putra Malaysia 2017 Conference or Workshop Item PeerReviewed application/pdf en http://psasir.upm.edu.my/id/eprint/58694/1/4-Sunday_Akpan.pdf Akpan, Sunday Sunday and Mahat, Fauziah and Amin Noordin, Bany Ariffin and Md Nassir, Annuar (2017) Another look at risk-based capital regime, capital structure, insurer's risk profile and performance: a conceptual paper. In: Global Conference on Business and Economics Research (GCBER) 2017, 14-15 Aug. 2017, Universiti Putra Malaysia, Serdang, Selangor. (pp. 50-57). http://www.econ.upm.edu.my/upload/dokumen/20170802183103007-Sunday_Akpan.pdf
institution Universiti Putra Malaysia
building UPM Library
collection Institutional Repository
continent Asia
country Malaysia
content_provider Universiti Putra Malaysia
content_source UPM Institutional Repository
url_provider http://psasir.upm.edu.my/
language English
description This paper evaluates capital structure under risk-based capital regime from the perspective of insurance firms and its performance. It also evaluates the moderating effect of insurer’s risk profile on capital-performance relationship. The authors aim to reveal ambiguities, gaps and omissions in the literature and to sketch avenues for future research. A conceptual framework for capital structure under risk-based capital era and its application is suggested focusing on equity, technical provision and required risk propensity for maximizing profit and wealth for all stakeholders. The research reviews that capital structure of insurers differs from non-insurance firms as such risk-based capital regulation must not only focus on the various types of risk but also recognized these differences. It is shown that insurers’ capital structure contains equity and technical provisions which comprises creditors and accruals, outstanding claims and insurance funds instead of equity and financial debt as it is with conventional non insurance firms. This study thus stressed that for capital structure to best explain performance of insurers, it must be measured by equity ratio and technical provision ratio in place of debt ratio and corporate risk profile (quantitative and qualitative) must enter its sequence of performance relational analysis and effectiveness equations. We stressed further that only with the proposed conceptual framework would a holistic understanding of insurer’s capital structure be achieved while the observed contradictory and inconclusive empirical findings on capital structure and firm performance could be resolved.
format Conference or Workshop Item
author Akpan, Sunday Sunday
Mahat, Fauziah
Amin Noordin, Bany Ariffin
Md Nassir, Annuar
spellingShingle Akpan, Sunday Sunday
Mahat, Fauziah
Amin Noordin, Bany Ariffin
Md Nassir, Annuar
Another look at risk-based capital regime, capital structure, insurer's risk profile and performance: a conceptual paper
author_facet Akpan, Sunday Sunday
Mahat, Fauziah
Amin Noordin, Bany Ariffin
Md Nassir, Annuar
author_sort Akpan, Sunday Sunday
title Another look at risk-based capital regime, capital structure, insurer's risk profile and performance: a conceptual paper
title_short Another look at risk-based capital regime, capital structure, insurer's risk profile and performance: a conceptual paper
title_full Another look at risk-based capital regime, capital structure, insurer's risk profile and performance: a conceptual paper
title_fullStr Another look at risk-based capital regime, capital structure, insurer's risk profile and performance: a conceptual paper
title_full_unstemmed Another look at risk-based capital regime, capital structure, insurer's risk profile and performance: a conceptual paper
title_sort another look at risk-based capital regime, capital structure, insurer's risk profile and performance: a conceptual paper
publisher Faculty of Economics and Management, Universiti Putra Malaysia
publishDate 2017
url http://psasir.upm.edu.my/id/eprint/58694/1/4-Sunday_Akpan.pdf
http://psasir.upm.edu.my/id/eprint/58694/
http://www.econ.upm.edu.my/upload/dokumen/20170802183103007-Sunday_Akpan.pdf
_version_ 1643836859456946176
score 13.211869

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