Capital Structure and Financial Performance of Listed Insurance Firms in Nigeria: A Multi-Estimator Panel Analysis with Threshold, Dynamic and Distributional Evidence
DOI:
https://doi.org/10.5281/zenodo.23414916Keywords:
Capital structure; insurance companies; financial performance; panel threshold regression; quantile regression; dynamic panel; Nigeria.Abstract
This study examines the relationship between capital structure and the financial performance of insurers listed on the Nigerian Exchange Group (NGX), accounting for small-panel limitations, potential reverse causality and non-linearity. Using an unbalanced panel for 2015–2025, the study employs pooled, fixed-effects, random-effects and Mundlak models, complemented by robust inference procedures, panel-threshold regression, method-of-moments quantile regression (MMQR), dynamic instrumental-variable estimators and Monte Carlo simulations. Leverage is measured using total-liabilities (TDR), debt-to-equity (DER), long-term (LTDR) and short-term (STDR) ratios, with financing debt (FDR), excluding policyholder liabilities, used for robustness analysis. The random-effects results indicate that a 0.10 increase in TDR is associated with a 0.62-percentage-point reduction in return on assets (ROA); however, this relationship is not robust across alternative estimators and inference procedures. Findings for return on equity, leverage maturity, non-linearity and interaction effects are inconclusive, while weak instruments preclude credible causal inference. The results underscore the importance of distinguishing financing debt from insurance-contract liabilities in assessing insurers’ performance and strengthening disclosure of borrowings, maturities and refinancing risks. The study contributes by integrating alternative leverage measures and rigorous sensitivity analyses to clarify the limits of associational and causal inference in Nigeria’s insurance sector.
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Copyright (c) 2026 Ibeanusi sylvanus chigozie, Echekoba Felix Nwolisa, Chioma Nnena Chidi-Okeke (Author)
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