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Effect of Liquidity Management on the Financial Performance of Listed Insurance Firms in Nigeria

Mohammed Mahmuda Khalifa PhD, AA Musa PhD, Saidu, Suleiman

Abstract

The study examined the effect of liquidity management on the financial performance of listed insurance firms in Nigeria using data collected from audited financial statements of thirteen (20) sampled listed insurance firms in Nigeria for the period of 2018 to 2024. Ex-post facto research design was employed and the fixed effects estimate was used for testing hypotheses after the Hausman test was run. Financial performance was proxied by return on asset (ROA) and Tobins Q (TBQ) while liquidity management was proxy by Claims Ratio (CMR) and Premium Growth Rate (PGR), and Firm Size (FSZ) and Gross Domestic Product (GDP) are the control variables. The study found that Claims Ratio (CMR) has significant negative effect on the financial performance of listed insurance firms in Nigeria while Premium Growth Rate (PGR) has significant positive effect on the financial performance of listed insurance firms in Nigeria measured by ROA and TBQ. However, the study recommends that insurance firms in Nigeria should focus on streamlining claims processing and reducing settlement times while implementing effective risk management strategies to mitigate potential risks associated with premium growth.

Keywords

Claims Ratio firm size liquidity management premium growth rate.

References

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