Actuarial Science and Insurance -Scholarly Publications
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- ItemOpen AccessAllocation of resources for risk management activities by business organisations in developing countries: Evidence from Zambia(2022) Silwimba, P. & Fadun, O. S.This study evaluates resources allocated for risk management by business organisations (financial and non-financial firms) in developing countries, using Zambia as a case study. Primary data collected from 158 organisations were analysed using MegaStat. The findings revealed that the majority (54.5%) of organisations, especially non-financial institutions, only commit resources to risk mitigation on an Adhoc or post-event basis, while 45.5% showed a budgeted approach. A significant part of the budgeted 45.5% was used for risk management activities, and 54.5% was used for regular daily operations. Despite this variation, all organisations engaged reported a significant expenditure on risk management, at least on Adhoc. At 4 degrees of freedom (df), which was one less than the total number of possible outcomes, a non-parametric test for significance yielded a scientific P-value of 1.57e-0.7, (a numerical magnitude of 0.0014, P< 0.05). This suggests that the correlation and pattern of the findings were not random or by chance, but they carried a statistical significance. The study's main findings demonstrate that some business organisations in Zambia and other developing countries incur significant expenditure with a higher portion of their budgets to respond to risk management needs. Business organisations which do not have formal risk structures do so informally due to pressure from emerging business risks. The findings also indicated that financial institutions in developing countries allocate more resources towards risk management than non-financial institutions. The Phi coefficient (degree of association) was 0.486, showing a moderately significant relationship between the variables (risk management and resource allocation). Business organisations in Zambia and other developing nations must develop sound risk mitigation plans and allocate resources for risk management.
- ItemOpen AccessAn Analysis of the Use of Insurance by Banks - Evidence from the Nigerian Banking Sector(2016) Fadun, O.S.; Hood, J.The global financial crisis in the banking sector centred on range of issues connected with risk and its management. In effect, many banks were seen as being excessively focused on the potential rewards of high-hazard activities; but focused less on the negative consequences of those activities. The study also identified insurance policies suitable for managing banking risks, and articulated the need for banks to use appropriate insurance policies to manage their risks. Using data collected through questionnaire from 1050 participants selected through stratified sampling technique; the study analysed the use of insurance in the Nigerian banking sector. The study was based on the theoretical aspects of insurance practice. The findings suggest that: banks have insurance company or subsidiary firm, banks purchase insurance through insurance brokers/intermediaries; banks are statutorily required to purchase insurance, and centralisation of insurance and risk management practices are paramount risk management practices among banks in Nigeria. Generally, the study indicated that banks should clearly articulate risk management policies in order to promote organisation-wide effort and effective management of risks across organisational spectrum; thereby, integrating risk management into banks’ philosophy, practices and business plans. The implication for practice is that insurance is a risk management tool, suitable for managing banking risks.
- ItemOpen AccessAnalysis of insurance products and services effectiveness in rural areas (Case study of Lagos state, Nigeria).(2022) Idowu, T. S. & Fadun, O. S.Providing insurance services in rural areas is beneficial to improve insurance penetration. This paper analysed the effectiveness of insurance products and services in rural Lagos State, Nigeria. It assessed the ability of the Nigerian insurance sector in providing insurance services to rural areas, and identifying how geographic conditions and lack of infrastructure amenities affect the location of insurance companies. The data used for the study was collected through interviews. The findings show that rural dwellers' lack of knowledge about the insurance and insurance industry prevents them from engaging in the industry. The findings also show that while non-settlement of insurance claims discouraged rural dwellers from purchasing insurance products and services, there is no affordability of insurance products and services mainly for rural dwellers in Nigeria. The results suggest that the government and the insurance sector should develop insurance products and services to meet the needs of rural dwellers to ensure insurance growth and deepened insurance penetration in Nigeria.
- ItemOpen AccessAnalysis of the impacts of insurance claims settlement on economic growth - The case of Nigeria(2023) Fadun, O. S.Insurance plays an essential role in stimulating economic growth. Insurance is an intangible product, and prompt claim settlement proves that insurers fulfill their promises to the insureds. This paper analyses the impacts of insurance claims settlement on economic growth. It examines the effect of insurance claims' settlements on a nation's economic growth, using Nigeria as a case study. The research utilised an ex-post facto design, using 28-year time series data (1992 – 2019). Gross Domestic Product (GDP) and Nigeria's insurance companies' claims settlement are the dependent and independent variables used for the study, respectively. The Long-run co-integration result revealed that INCLM (Insurance claims) has an insignificant negative effect on GDP. The coefficient shows that a percentage increment in INCLM (Insurance claims) would result in a 1.22 decrease in GDP. The results indicate that insurance claims settlement has an insignificant negative effect on economic growth. This implies a negative relationship between insurance claims settled by insurance companies and economic growth in Nigeria. The finding is surprising as one expects that settlement of claims by insurers should positively impact economic growth. The implication is that the relationship between insurance claims settlement and economic growth varies depending on several factors, including country-specific factors and the performance of the country's insurance industry.
- ItemOpen AccessArtificial Neural Network Model for Predicting Insurance Insolvency(2012) Ibiwoye, A; Ajibola, O.O; Sogunro, A.Bserves as a medium for fund mobilization. In spite of the harsh economic environment in Nigeria, the insurance industry has been crucial to the consummation of business plans and wealth creation. However, the continued downturn experienced by many countries, in the last decade, seems to have impacted negatively on the financial health of the industry, thereby rendering many insurance companies inherently distressed. Although there is a regulator to monitor the insurance companies in order to prevent insolvency and protect the right of consumers this oversight function has been made difficult because the regulators appeared to lack the necessary tools that would adequately equip them to perform their oversight functions. One such critical tool is a decision making model that provides early warning signal of distressed firms. This paper constructs an insolvency prediction model based on artificial neural network approach which could be used to evaluate the financial capability of insurance companies.
- ItemOpen AccessAssessing the Relationship between Sales Quotas and Moral Judgement of Insurance Salespersons: The Moderating Effects of Personal Moral Values, Quota Failure Consequences, and Corporate Ethical Climate(Scholarlink Research Institute Journals, 2013) Ojikutu, R. K.; Obalola, M. A.; Omoteso, K.There is an increasing call for managers in the Nigerian insurance industry to espouse higher level of ethical behaviour to earn the trust of customers, regulatory agencies, and other stakeholders. Arguably, this will enhance market penetration, increase patronage and higher level of profit. Theoretically however, ethical behaviour can be institutionalized in organizations if the top management support ethical behaviour through punishment and reward (high ethical climate). Other than corporate ethical values, managers’ beliefs about the rightness and wrongness of an action in a particular situation could also be a function of his/her personal moral philosophy. With respect to financial services, one aspect of marketing which have been empirically shown to have influence ethical judgement and behaviours of managers is sales quotas. When salespersons are assigned higher sales quotas, which are perceived as difficult, the tendency to engage in unethical behaviour to achieve this target becomes higher. In this study, we assess and extend the theoretical relationship between moral judgement of salespersons and perceived quota difficulty in the insurance industry. The study also explores the moderating effects of salesperson’s ethical values (idealism and relativism), corporate ethical climate, and quota failure consequences on the proposed relationship. With a structured questionnaire, data was collected from respondents in the target industry through a multi-stage sampling strategy. Exploratory factor analysis was performed to assess the factorial structure of the measures used in the study, their reliability and validity. Using correlation and regression analysis, the results were presented and discussed with managerial implications for the Nigerian insurance industry.
- ItemOpen AccessAssessing the Relationship between Sales Quotas and Moral Judgement of Insurance Salespersons: The Moderating Effects of Personal Moral Values, Quota Failure Consequences, and Corporate Ethical Climate.(2013) Ojikutu, R.K.; Obalola, M.A; Omoteso, KThere is an increasing call for managers in the Nigerian insurance industry to espouse higher level of ethical behaviour to earn the trust of customers, regulatory agencies, and other stakeholders. Arguably, this will enhance market penetration, increase patronage and higher level of profit. Theoretically however, ethical behaviour can be institutionalized in organizations if the top management support ethical behaviour through punishment and reward (high ethical climate). Other than corporate ethical values, managers’ beliefs about the rightness and wrongness of an action in a particular situation could also be a function of his/her personal moral philosophy. With respect to financial services, one aspect of marketing which have been empirically shown to have influence ethical judgement and behaviours of managers is sales quotas. When salespersons are assigned higher sales quotas, which are perceived as difficult, the tendency to engage in unethical behaviour to achieve this target becomes higher. In this study, we assess and extend the theoretical relationship between moral judgement of salespersons and perceived quota difficulty in the insurance industry. The study also explores the moderating effects of salesperson’s ethical values (idealism and relativism), corporate ethical climate, and quota failure consequences on the proposed relationship. With a structured questionnaire, data was collected from respondents in the target industry through a multi-stage sampling strategy. Exploratory factor analysis was performed to assess the factorial structure of the measures used in the study, their reliability and validity. Using correlation and regression analysis, the results were presented and discussed with managerial implications for the Nigerian insurance industry.
- ItemOpen AccessAssessment Of The Level Of Participation Of Workers Towards Developing Old Age Survival Policies Using The Informal Sector(The Faculty of Business Administration, University of Lagos,Akoka, Lagos., 2010-12) Mojekwu, J.N; Udoh, H.M.Informal sector in Nigeria is a provider. of employment. It. is very precarious in nature. The sector is disorganized, unprotected and unregulated. The employment strategy is not formalized therefore; it is not given a greater attention in valuation of national income account. The sector fights against unemployment, dismissal and underemployment. The provisions for survival through their activities are usually tentative. This study realized that their expected income often comes through daily contributions Ajo/Esusu ", "Adashi" and ..Utu-ubochi ") in Yoruba. Hausa and Igbo languages) and is distributed for various uses. In the study, various activities from artisans and craftsmen in rural and urban settlements, in Lagos(Nigeria) were selected Survival strategies were verified and chi-square tests carried out to find out the dependency of activities and income from selected variables. This was used to establish the emphasis on their plans ;or old age survival. It was realized that informal sector is a flourishing sector due to participants' passion and quest for economic survival. Generally, employment provision cuts across various ages. The main purpose of this study is to assess the extent of involvement of the workers in the informal economy,towards development of old age survival policies.
- ItemOpen AccessAttitude and Perception about Insurance Fraud in Lagos State, Nigeria(2011) Ojikutu, R.K; Yusuf, T.O; Obalola, M.Ahis study examined the attitude and perception of residents of Lagos State, Nigeria towards insurance fraud. Literature search shows that research in the area is almost nonexistent in Nigeria in general and Lagos State in particular. A sample of 400 respondents were selected for the study and only 85.25 percent of them returned the questionnaires. The result of the study showed that there is general public tolerance or indifference towards fraud. About 60 percent of the respondents do not trust their insurance companies and as many as 17.1 percent of those who have suffered a loss or damage in the past would not file claims because they do not think their insurance company would be transparent in the dealings.
- ItemOpen AccessAwareness levels of the dynamics of the climate change risk impacts - Evidence from Africa, Eastern Asia and emerging countries.(2022) Silwimba, P. & Fadun, O. S.Climate change affects individuals and business organisations. This study examines individuals and organisations' levels of awareness of the effects of climate change and their responses to climatic changes. It also establishes awareness of the predominant effects of climate change risks in Africa and Eastern Asia. This study was descriptive research using surveys and fact-finding enquiries of different kinds. Using a purposive sampling method, one hundred five (105) participants were selected from more than 25 countries from Africa, Asia and other emerging countries for the study. The results indicate that, on average, many people are aware of the effects and gravity of climate change. A nonparametric test of the significance of climate change's impact on financial performance yielded a hypothetical mean above the threshold of 3, a P value of less than 0.05 at a 104 df. The results indicate that climate change adversely affects individuals, organisations and communities. The findings show that communities are relatively aware of the impacts of climate change and can quantify the losses in financial terms, at least as an estimate. It indicates that the level of awareness of individuals and organisations is satisfactory. The findings on vulnerability and exposure indicated that people are aware of climate change and its effects on individuals, organisations and communities. The results reveal that it is easy to manage climate change risks using techniques developed by local and international authorities. Governments, especially in Africa, must respond fervently to demands for climate change mitigations.
- ItemOpen AccessBeyond Philanthropy: Corporate Social Responsibility in the Nigerian Insurance Industry(Emerald Group Publishing Limited, 2008) Obalola, M.APurpose – The purpose of this paper is to show that given the dearth of literature on how firms in the African continent have embraced and practiced corporate social responsibility (CSR), this study contributes to the CSR literature by examining managers' perceptions about CSR, structural changes to enhance, its implementation, and the pattern of current CSR actions in Nigeria. Design/methodology/approach – The study used quantitative approach and collected primary data through a three‐part structured questionnaire, from insurance firms operating in Nigeria. The 67 responses received were analysed descriptively and the results presented. Findings – The overall results indicate a strong support for social responsibility and the translation of this support into action through involvement in some community based projects. Evidence from the study also suggests that social responsibility is still largely perceived as a philanthropic gesture. Research limitations/implications – The study only covers insurance firms operating in Lagos state. Furthermore, only one response represents the view of a firm, hence the need to exercise caution in generalizing the results. Practical implications – Since the results suggest the readiness of the Nigerian insurance firms to go beyond the traditional view of profit and shareholders' wealth maximization, there must be a consistency between this posture and their actions. Originality/value – The study provides an insight into perceptions about corporate social responsibility in the insurance industry, in a developing country and in Africa, which to the best knowledge of the author, have not been done before.
- ItemOpen AccessA Bootstrap Model for estimating the concentration of some heavy metal pollutants of ground water from soil(2011-11) Adeleke, I.A; Okafor, R; Esan, E.O; Olayinka, O.K; Oyeyiola, A.O; Odunuga, S; Dallah, HEstimation of the concentration of some heavy metals in soil is very important in risk assessment study to determine contaminant risk to water from soil. An adaptive cluster sampling technique was employed and a model-assisted approach that incorporates models into design-based estimation was used. In this paper, a bootstrap procedure is proposed to approximate the distribution of the concentration of heavy metals in the soil. The proposed method overcomes the problems associated with methods requiring distributional assumptions the validity of which are often times extremely difficult to check. We conclude with a comparison of this procedure to the well known Horvitz-Thompson (HT) type estimator.
- ItemOpen AccessComparative analysis of modes of monetary exchange rates in Nigeria.(2011-12-28) Mojekwu, J.N; Okpala, O.P.; Adeleke, I.A.The study examined and compared the three modes of monetary exchange rates available in the Nigerian financial sector. The study utilized the data on the three alternative modes of monetary exchange rates, namely, Central Bank of Nigeria, Bureau de Change rates and Inter-bank rate against US Dollar. Time series was fitted to the three sets of data and the result examined for effective comparison. The results reveal that Central Bank of Nigeria yields the most stable exchange rate while Bureau de Change rates and the Inter-bank exchange rates fluctuate over the periods. Autoregressive integrated moving average (ARIMA) model was used to fit time series to the three sets of data. Findings reveal that there are variations in the performances of the three modes of exchange rates against US Dollar. The study concluded that Central Bank of Nigeria exchange rate is most stable while Bureau de Change and Inter-bank exchange rates to US Dollar fluctuate over the period under investigation.
- ItemOpen AccessCorporate governance and insurance company growth: Challenges and opportunities(2013) Fadun, O. S.The paper examines challenges and opportunities associated with corporate governance and insurance company growth. It advocates the imperative of good corporate governance in the insurance industry. The paper describes corporate governance, examines corporate governance theoretical perspectives, highlights the challenges of corporate governance in Nigeria, and explores the relationship which exists between corporate governance and insurance company growth in Nigeria. The study is an empirical design using the responses of survey, structured questionnaires, of 112 respondents. Pearson product coefficient of correlation(r) is employed for data analysis and hypotheses testing. The findings reveal that good corporate governance promotes safe and sound insurance practice; effective supervision promotes good corporate governance; and the new code of good corporate governance for the Nigerian insurance industry enhances insurance companies’ growth in Nigeria. The implication for practice suggests that effective corporate governance is necessary for proper functioning of insurance companies in order to promote growth and secure public confidence. The paper highlights the fact good corporate governance practices can enable the Nigeria insurance industry to generate more resources to create more employment opportunities and support the economy by way of prompt claims settlement.
- ItemOpen AccessCorporate governance and insurance firms’ performance: Empirical study of Nigerian experience(2013) Fadun, O. S.The study investigates the relationship between corporate governance and performance of insurance firms in Nigeria. The data used for the study is derived from five consecutive years (2006 and 2010) audited financial reports of 10 insurance firms listed on the Nigerian stock exchange. This represents 50 firms-years time series observations. Using Pooled Least Square method, the data is processed with E-views software to derive statistical results. The results show varying positive relationship between corporate governance and firm’s performance. The board size, CEO status, audit committee, dividend policy and annual general meeting, all indicate positive relationship between corporate governance and performance of insurance firms in Nigeria. However, the results show negative relationship between block-holders and institutional ownership in relation to firms’ performance. The outcome emphasises the importance of good corporate governance structure in Nigerian insurance firms and the economy at large. The study contributes to knowledge on the subject in two major ways: first, it delivers a more robust and simple understanding of the impact of corporate governance on firm’s performance; and second, It fills knowledge gap because no study has been conducted on corporate governance and firm’s performance in the Nigerian insurance industry.
- ItemOpen AccessCorporate governance, a risk management tool for enhancing organizational performance: Study of Nigeria Stock Exchange (NSE) listed companies.(2017) Fadun, O. S.Corporate governance is relevant in both developed and emerging economies. The study viewed corporate governance as a risk management tool for enhancing organisations performance and protection of stakeholders’ interest. The study investigated the impact of corporate governance on organizational performance, using thirty (30) Nigeria Stock Exchange (NSE) listed companies in 2016. The study focused on three corporate governance variables (i.e., Board Size, Board Independence, CEO Duality/Tenure); and two performance variables - Returns on Asset (ROA) and Returns on Equity (ROE). Secondary data, extracted from published annual reports of selected companies and NSE website, was used for the study. The findings revealed a positive correlation between board size, independence directors, and performance variables; but, showed a negative correlation between CEO tenure and performance variables. The results showed that the number of directors was not positively related to performance in terms of ROA; but, it revealed a positive correlation between board size and performance in terms of ROE. It revealed that the correlation between CEO tenure and performance variables (ROA and ROE) was negative. It also showed that CEO Duality has a positive correlation with ROA, and negative relationship with ROE. The findings revealed that adoption of sound corporate governance practices by listed companies can improve their performances. The underlining conclusion is that organisations would benefit from sound corporate governance practices by way of increased investment from investors and reduced capital cost. Shareholders confidence and wealth will also be improved; and the nation’s economy will benefit by way of improved GDP.
- ItemOpen AccessCorporate social responsibility (CSR) practices and stakeholders’ expectations - The Nigerian perspectives(2014) Fadun, S. O.Using Carroll’s (1991) Corporate Social Responsibility (CSR) model, the study examines business CSR practices and stakeholders’ expectations in Nigeria. Carroll’s (1991) CSR model states that four kinds of social responsibilities constitute total CSR: economic, legal, ethical, and philanthropic. Both primary (survey) and secondary (the literature) data are used for the study. There are several stakeholders in business; but, for the purpose of the study employees, customers, shareholders, and local communities are identified as the main stakeholders in the context of the business environment in Nigeria. 240 questionnaires are administered to participants, selected through purposive sampling technique, in the six geopolitical zones of Nigeria. One hundred and fifty eight (158) questionnaires, representing 66% response rate, were duly completed and retuned for the study. The findings indicate that CSR is concerned with treating stakeholders ethically; and business should protect wide range of stakeholders’ interest. We found that the four dimensions of CSR (economic, legal, ethical and philanthropic) are not ascribed equal importance in Nigeria. Nigeria’s Stakeholders place more emphasis on economic, legal and ethical responsibilities than on philanthropic components. Understanding and effective management of stakeholders’ as well as their expectations can enhance corporate image and competitive advantage. The implication for practice is that business needs to identify relevant stakeholders and integrate primary stakeholders’ interests into organisational strategic planning. It shows that identification of stakeholders’ groups is beneficial to business managers and decision-makers.
- ItemOpen AccessCultural awareness, a form of risk management in international business - Case study of China(2014) Fadun, O. S.Mutual awareness of cultural references is essential in international business as levels of formality vary greatly among cultures. The emergence of capitalism into China induces international firms’ investment in the country. This resulted to creation of a production base to explore the inexpensive factors of production, particularly low-cost labour. The study examines cultural awareness as a form of risk management in international business, using China as a case study. The study uses ‘XYZ International’, with western cultural background, as a hypothetical international business that operates in China market. The study explores international trade and global organisations; considers barriers to international business; outlines cultural awareness as a form of risk management in international business; highlights Chinese business culture; outlines the impact of culture on negotiation; appraises Chinese businessman culture and its impact in the Chinese market; and justifies reasons to support conducting trade with China. The study findings indicate that mutual awareness of cultural references is essential in international business, and levels of formality vary greatly among cultures. The implication for practice is that culture induces each country societal prevailing life-styles because culture and life-style influence patterns of consumption, manufacturing, agriculture, service, distribution and investment.
- ItemOpen AccessDeterminants of Web-accessibility of Corporate Social Responsibility Communications(Emerald Group Publishing Limited, 2012) Adelopo, I; Moure, R.C; Preciado, L.V; Obalola, M.AThe corporate social responsibility (CSR) debate has developed tremendously over decades. However, while CSR communication has developed significantly, web‐accessibility of CSR communications is under researched. The purpose of this paper is to examine how firms make their CSR communications accessible to their stakeholders on the internet. Design/methodology/approach – The authors used number of “clicks” to download CSR communication of a firm to measure its accessibility. Independent mean test showed that CSR communications by high impact sectors are more accessible on the internet than low impact sectors, but web‐accessibility is not affected by country. Findings – Although CSR research has grown tremendously over the decades, the discourse has been largely restricted to disclosures in the annual reports and, lately, to the standalone sustainability reports. In addition, they have mainly examined the management's motives for disclosures, using legitimacy theory as the most influential theoretical underpinning. Only very few studies have examined CSR communication on the internet and even these studies have only researched the content of the disclosure, examining the quality and quality of disclosures. Originality/value – The originality of this paper lies in its consideration of the effect of firms' CSR communications on the recipients. While CSR communication has developed significantly, web‐accessibility of CSR communications remains under researched.
- ItemOpen AccessDoes credit risk management impact the financial performance of commercial banks(2023) Fadun, O. S. & Silwimba, P.Commercial banks take deposits and lend for consumption and investment purposes. This study examined the impacts of credit risk management on the financial performance of commercial banks, using five (5) first-tier banks in Nigeria as a case study. Fifteen (15) years of panel data (2005 to 2019), extracted from the audited financial reports of five first-tier listed banks, was used for the study. All the banks used are Deposit Money Banks (DMBs) listed on the Nigerian Stock Exchange. This study used Non-performing loans (NPL) and the expected credit loss impairment provisions (ECL) as credit risk management indicators and Return on assets (ROA) as the financial performance indicator. The long-run co-integration results revealed that NPL negatively and significantly affects ROA in Nigeria, and ECL positively and substantially affects ROA in Nigeria. The findings suggest that credit risk management has insignificant positive impacts on the financial performance of commercial banks in Nigeria. The study recommends that banks undertake thorough credit risk assessments before giving out loans to ensure sound credit risk management, protect depositors' funds, avoid banks' distress, and enhance their profitability.
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