This study was conducted in Ethiopian insurance companies in order to measure the technical efficiency using DEA input oriented approach under both constant and variable return versions and Malmquist index output oriented approach in the period 2006-2010. In the first stage, the relative technical efficiency is estimated with data envelopment analysis (DEA) to establish benchmarking company, then, they are ranked according to their technical efficiency. Mann whiney- U test in the second stage was used to determine the factors affecting efficiency. The concept of efficiency concerns is an insurer’s ability to produce a given set of outputs (such as premiums and investment income) via the use of inputs such as administrative and general expenses and financial capital. The insurance company is said to be technically efficient if it cannot reduce its input usage without some corresponding reduction in outputs, given the current state of production technology in the industry. The technical efficiency of Ethiopian insurance companies during the study period was 86.7%, 97.1% and 84.9% in technical efficiency, pure technical efficiency and scale efficiency, respectively. The productivity change shows Ethiopian insurance companies were quite well in efficiency change rather than technological change. It suggested that it is better to employ advanced technology to be efficient in competitive environment. So it is advisable Ethiopian insurance companies are better-off to follows the best practicing firms in the industry. The economic implications arising from findings were also considered.
Inhaltsverzeichnis (Table of Contents)
- CHAPTER ONE:
- Introduction
- Background of the Study
- Statements of Problems
- Objective of the Study
- Significance of the Study
- Scope and Limitation of the Study
- Organization of Paper
- CHAPTER TWO:
- Related Literature Review
- Theoretical Literature
- Concept of Efficiency
- Parametric Approach
- Mathematical Programming Methods
- Basics of DEA
- DEA and Technical Efficiency
- The Constant Return to Scale (CRS) DEA
- The Variable Return to Scale (VRS) DEA
- Scale Efficiency
- Malmquist Productivity Index
- Inputs and Output Determination
- Empirical Literature Review
- Theoretical Literature
- Related Literature Review
- CHAPTER THREE:
- Research Methodology
- Research Design
- Data Source and Types
Zielsetzung und Themenschwerpunkte (Objectives and Key Themes)
This study aims to measure the technical efficiency of Ethiopian insurance companies from 2006-2010 using Data Envelopment Analysis (DEA) and the Malmquist index. It seeks to identify benchmarking companies, rank them by efficiency, and determine factors influencing their efficiency. The economic implications of the findings are also considered.
- Technical efficiency of Ethiopian insurance companies
- Application of DEA and Malmquist index methodologies
- Identification of factors affecting efficiency
- Benchmarking of insurance companies
- Economic implications of efficiency levels
Zusammenfassung der Kapitel (Chapter Summaries)
CHAPTER ONE: Introduction: This chapter introduces the study, providing background information on the Ethiopian insurance industry and highlighting the problem of measuring technical efficiency. It outlines the study's objectives, significance, scope, and limitations, setting the stage for the subsequent chapters by establishing the research context and its importance in understanding the performance of Ethiopian insurance companies. The chapter concludes with an overview of the paper's structure.
CHAPTER TWO: Related Literature Review: This chapter reviews existing literature on efficiency measurement, focusing on both theoretical and empirical studies. The theoretical section explores the concept of efficiency, different approaches to its measurement (parametric and non-parametric), and a detailed explanation of Data Envelopment Analysis (DEA), including constant and variable returns to scale models, and the Malmquist index. The empirical section examines previous research on the efficiency of insurance companies, providing a context for the current study and identifying gaps in the existing literature that this research aims to fill. This chapter lays the groundwork for the methodology employed in the subsequent chapter by providing a robust theoretical foundation and a clear understanding of prior research.
CHAPTER THREE: Research Methodology: This chapter details the research design, data sources, and methods used in the study. It describes the specific DEA and Malmquist index approaches employed to analyze the technical efficiency of Ethiopian insurance companies. This involves outlining the selection of inputs and outputs used in the analysis, justifying the choices made based on relevant literature and industry standards. The chapter also specifies the statistical techniques used for analyzing the data, including the Mann-Whitney U test to identify factors influencing efficiency. The clear explanation of the methodology ensures the reproducibility and transparency of the research findings.
Schlüsselwörter (Keywords)
Insurance companies, DEA, Data Envelopment Analysis, Malmquist index, Technical efficiency, Scale efficiency, Productivity change, Ethiopian insurance industry, Benchmarking, Efficiency analysis.
Frequently Asked Questions: A Comprehensive Language Preview
What is this document?
This document is a comprehensive language preview of an academic study. It includes the title, table of contents, objectives and key themes, chapter summaries, and keywords. The preview provides a structured overview of the research, making it easier to understand the scope and focus of the study.
What is the topic of the study?
The study focuses on measuring the technical efficiency of Ethiopian insurance companies between 2006 and 2010. It uses Data Envelopment Analysis (DEA) and the Malmquist index to analyze the efficiency of these companies, aiming to identify high-performing companies (benchmarks), rank them based on efficiency, and understand the factors influencing their efficiency.
What methodologies are used in this study?
The core methodologies employed are Data Envelopment Analysis (DEA) and the Malmquist index. These are used to assess the technical efficiency and productivity change of the Ethiopian insurance companies. The study also utilizes statistical techniques, including the Mann-Whitney U test, to identify factors influencing efficiency.
What are the key objectives of this study?
The main objectives include: measuring the technical efficiency of Ethiopian insurance companies; applying DEA and the Malmquist index; identifying factors affecting efficiency; benchmarking insurance companies; and analyzing the economic implications of the efficiency levels.
What are the key themes explored in the study?
Key themes include technical efficiency, the application of DEA and Malmquist index methodologies, identification of efficiency-influencing factors, benchmarking of insurance companies, and the economic implications of efficiency levels within the Ethiopian insurance industry.
What are the chapter summaries?
Chapter One (Introduction): Introduces the study, providing background information on the Ethiopian insurance sector, stating the research problem, objectives, significance, scope, and limitations. It also outlines the paper's structure.
Chapter Two (Literature Review): Reviews existing literature on efficiency measurement, covering theoretical concepts (efficiency, DEA, Malmquist index) and empirical studies on insurance company efficiency.
Chapter Three (Methodology): Details the research design, data sources, and methods used, specifically outlining the DEA and Malmquist index applications, input/output selection, and statistical analysis techniques.
What are the keywords associated with this study?
Keywords include: Insurance companies, DEA, Data Envelopment Analysis, Malmquist index, Technical efficiency, Scale efficiency, Productivity change, Ethiopian insurance industry, Benchmarking, Efficiency analysis.
What is the significance of this study?
The study's significance lies in its contribution to understanding the performance of the Ethiopian insurance industry. By identifying efficient and inefficient companies and the factors driving these differences, the study can inform policy decisions and improve the overall efficiency of the sector.
What type of data is used in this research?
The study utilizes data related to the performance of Ethiopian insurance companies. The specific types of data (inputs and outputs used in the DEA analysis) are detailed in Chapter Three (Research Methodology).
Who is the intended audience for this research?
The intended audience is primarily academics and researchers interested in efficiency analysis, the insurance industry, and the Ethiopian economy. The findings could also be valuable to policymakers and insurance industry professionals.
- Quote paper
- Mulugeta Abuye Ertiro (Author), 2012, Measurment of Technical efficiency of Ethiopian insurance companies.Technical efficiency, Munich, GRIN Verlag, https://www.grin.com/document/442848
