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...

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Autores principales:	Mirza Šikalo, Almira Arnaut-Berilo
Formato:	article
Lenguaje:	EN
Publicado:	Faculty of Economics, University of Tuzla 2021
Materias:	data envelopment analysis technical efficiency insurance sector efficiency the insurance industry in bosnia and herzegovina Economic theory. Demography HB1-3840 Business records management HF5735-5746 Finance HG1-9999
Acceso en línea:	https://doaj.org/article/ef5bafc109864358888a1d44d72d9d41
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id	oai:doaj.org-article:ef5bafc109864358888a1d44d72d9d41
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spelling	oai:doaj.org-article:ef5bafc109864358888a1d44d72d9d412021-12-02T16:52:16ZEFFICIENCY ANALYSIS OF THE INSURANCE SECTOR IN BOSNIA AND HERZEGOVINA1512-89622303-680Xhttps://doaj.org/article/ef5bafc109864358888a1d44d72d9d412021-05-01T00:00:00Zhttp://ef.untz.ba/wp-content/uploads/2021/10/5_MAY_2021_DOI_pp_49_62.pdfhttps://doaj.org/toc/1512-8962https://doaj.org/toc/2303-680XWe 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. Mirza ŠikaloAlmira Arnaut-BeriloFaculty of Economics, University of Tuzlaarticledata envelopment analysistechnical efficiencyinsurance sector efficiencythe insurance industry in bosnia and herzegovinaEconomic theory. DemographyHB1-3840Business records managementHF5735-5746FinanceHG1-9999ENEconomic Review, Vol XIX, Iss 01, Pp 49-62 (2021)
institution	DOAJ
collection	DOAJ
language	EN
topic	data envelopment analysis technical efficiency insurance sector efficiency the insurance industry in bosnia and herzegovina Economic theory. Demography HB1-3840 Business records management HF5735-5746 Finance HG1-9999
spellingShingle	data envelopment analysis technical efficiency insurance sector efficiency the insurance industry in bosnia and herzegovina Economic theory. Demography HB1-3840 Business records management HF5735-5746 Finance HG1-9999 Mirza Šikalo Almira Arnaut-Berilo EFFICIENCY ANALYSIS OF THE INSURANCE SECTOR IN BOSNIA AND HERZEGOVINA
description	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.
format	article
author	Mirza Šikalo Almira Arnaut-Berilo
author_facet	Mirza Šikalo Almira Arnaut-Berilo
author_sort	Mirza Šikalo
title	EFFICIENCY ANALYSIS OF THE INSURANCE SECTOR IN BOSNIA AND HERZEGOVINA
title_short	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_sort	efficiency analysis of the insurance sector in bosnia and herzegovina
publisher	Faculty of Economics, University of Tuzla
publishDate	2021
url	https://doaj.org/article/ef5bafc109864358888a1d44d72d9d41
work_keys_str_mv	AT mirzasikalo efficiencyanalysisoftheinsurancesectorinbosniaandherzegovina AT almiraarnautberilo efficiencyanalysisoftheinsurancesectorinbosniaandherzegovina
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EFFICIENCY ANALYSIS OF THE INSURANCE SECTOR IN BOSNIA AND HERZEGOVINA

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