EFFICIENCY ANALYSIS OF THE INSURANCE SECTOR IN BOSNIA AND HERZEGOVINA
We analyzed the efficiency of the insurance industry in Bosnia and Herzegovina (BiH) in the period from 2015 to 2019 in order to identify good and bad practices, sources of inefficiency and to propose guidelines for the necessary efficiency improvements based on the results. Efficiency measurement...
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| Format: | Article |
| Language: | English |
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Faculty of Economics, University of Tuzla
2021-05-01
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| Series: | Economic Review |
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| Online Access: | https://www.er.ef.untz.ba/index.php/er/article/view/48 |
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| author | Mirza Šikalo Almira Arnaut-Berilo |
| author_facet | Mirza Šikalo Almira Arnaut-Berilo |
| author_sort | Mirza Šikalo |
| collection | DOAJ |
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We analyzed the efficiency of the insurance industry in Bosnia and Herzegovina (BiH) in the period from 2015 to 2019 in order to identify good and bad practices, sources of inefficiency and to propose guidelines for the necessary efficiency improvements based on the results. Efficiency measurement was performed using the nonparametric Data Envelopment Analysis (DEA) technique as the most commonly used tool for efficiency analysis in finance. We used one output and two input variables according to the input-oriented approach assuming a variable return to scale (VRS). Empirical research was conducted on all insurance companies from BiH, which are grouped according to the size of assets, type of insurance, and headquarters in order to determine whether there are differences in the efficiency of insurance companies in terms of their size, type of insurance, or depending on whether it operates in the Federation of Bosnia and Herzegovina (FBiH) or Republic of Srpska (RS). The results of the analysis indicate significant inefficiencies in the insurance sector in BiH, but also differences among the observed groups. The insurance sector is more efficient in FBiH compared to RS, and insurance companies in the composite insurance market are significantly more efficient than companies in the non-life insurance market. Finally, the research has showed a relatively high level of positive correlation between the size of an insurance company and its efficiency. According to all efficiency indicators, there is significant potential for efficiency improvement. Based on the analysis, the main causes of inefficiency were identified and guidelines for improving efficiency were proposed.
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| format | Article |
| id | doaj-art-5c92d1685bf241768968cfb2478d1abb |
| institution | Kabale University |
| issn | 1512-8962 2303-680X |
| language | English |
| publishDate | 2021-05-01 |
| publisher | Faculty of Economics, University of Tuzla |
| record_format | Article |
| series | Economic Review |
| spelling | doaj-art-5c92d1685bf241768968cfb2478d1abb2025-02-11T00:32:55ZengFaculty of Economics, University of TuzlaEconomic Review1512-89622303-680X2021-05-01191EFFICIENCY ANALYSIS OF THE INSURANCE SECTOR IN BOSNIA AND HERZEGOVINAMirza Šikalo0Almira Arnaut-Berilo1School of Economics and Business, University of Sarajevo, Bosnia and HerzegovinaSchool of Economics and Business, University of Sarajevo, Bosnia and Herzegovina, We analyzed the efficiency of the insurance industry in Bosnia and Herzegovina (BiH) in the period from 2015 to 2019 in order to identify good and bad practices, sources of inefficiency and to propose guidelines for the necessary efficiency improvements based on the results. Efficiency measurement was performed using the nonparametric Data Envelopment Analysis (DEA) technique as the most commonly used tool for efficiency analysis in finance. We used one output and two input variables according to the input-oriented approach assuming a variable return to scale (VRS). Empirical research was conducted on all insurance companies from BiH, which are grouped according to the size of assets, type of insurance, and headquarters in order to determine whether there are differences in the efficiency of insurance companies in terms of their size, type of insurance, or depending on whether it operates in the Federation of Bosnia and Herzegovina (FBiH) or Republic of Srpska (RS). The results of the analysis indicate significant inefficiencies in the insurance sector in BiH, but also differences among the observed groups. The insurance sector is more efficient in FBiH compared to RS, and insurance companies in the composite insurance market are significantly more efficient than companies in the non-life insurance market. Finally, the research has showed a relatively high level of positive correlation between the size of an insurance company and its efficiency. According to all efficiency indicators, there is significant potential for efficiency improvement. Based on the analysis, the main causes of inefficiency were identified and guidelines for improving efficiency were proposed. https://www.er.ef.untz.ba/index.php/er/article/view/48data envelopment analysistechnical efficiencyinsurance sector efficiencythe insurance industry in Bosnia and Herzegovina |
| spellingShingle | Mirza Šikalo Almira Arnaut-Berilo EFFICIENCY ANALYSIS OF THE INSURANCE SECTOR IN BOSNIA AND HERZEGOVINA Economic Review data envelopment analysis technical efficiency insurance sector efficiency the insurance industry in Bosnia and Herzegovina |
| title | EFFICIENCY ANALYSIS OF THE INSURANCE SECTOR IN BOSNIA AND HERZEGOVINA |
| title_full | EFFICIENCY ANALYSIS OF THE INSURANCE SECTOR IN BOSNIA AND HERZEGOVINA |
| title_fullStr | EFFICIENCY ANALYSIS OF THE INSURANCE SECTOR IN BOSNIA AND HERZEGOVINA |
| title_full_unstemmed | EFFICIENCY ANALYSIS OF THE INSURANCE SECTOR IN BOSNIA AND HERZEGOVINA |
| title_short | EFFICIENCY ANALYSIS OF THE INSURANCE SECTOR IN BOSNIA AND HERZEGOVINA |
| title_sort | efficiency analysis of the insurance sector in bosnia and herzegovina |
| topic | data envelopment analysis technical efficiency insurance sector efficiency the insurance industry in Bosnia and Herzegovina |
| url | https://www.er.ef.untz.ba/index.php/er/article/view/48 |
| work_keys_str_mv | AT mirzasikalo efficiencyanalysisoftheinsurancesectorinbosniaandherzegovina AT almiraarnautberilo efficiencyanalysisoftheinsurancesectorinbosniaandherzegovina |