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, Profitability, Financial leverageAbstract
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 analyzed them 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 optimize 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 to achieve higher returns, which would positively impact profitability.
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