The Effect of Financial Leverage on Profitability Indicators in Iraqi Insurance Companies
DOI:
https://doi.org/10.51173/tjms.v2i1.12Keywords:
Insurance companies, Panel Data, ProfitabilityAbstract
This study aims to measure the impact of the financial leverage ratio, an independent variable, on the profitability index, a dependent variable, for private insurance companies in the Iraqi insurance sector, including Dar Al-Salaam, Gulf, Al-Hamra, Al-Amen, and Al-Ahllia. Utilizing a descriptive analytical approach, the researcher employed measures of central tendency and conducted the analysis with the statistical program Eviews. The data, derived from annual financial reports published on the Iraq Stock Exchange from 2010 to 2021, was analyzed using linear regression models to test the study hypotheses. The findings indicate that financial leverage significantly influences both the rate of return on assets and the rate of return on equity. Based on these results, the study recommends that insurance companies focus on optimizing their financial leverage ratio to enhance revenue generation and profit accumulation, ultimately maximizing shareholder equity. Additionally, to improve their competitive position, companies should diversify their marketing strategies for insurance products and develop robust investment programs aimed at achieving higher returns, which would positively impact profitability.
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