Two-stage DEA method in identifying the exogenous factors of insurers' risk and investment management efficiency

Rubayah Yakob, Zulkornain Yusop, Alias Radam, Noriszura Ismail

Research output: Contribution to journalArticle

5 Citations (Scopus)

Abstract

The objective of this study was to identify the exogenous variables of risk and investment management efficiency by using a two-stage data envelopment analysis (DEA) method. The first stage involves obtaining the efficiency scores of risk and investment management via DEA that requires only the traditional inputs and outputs. In the second stage, the Tobit regression analysis is conducted in which the efficiency score obtained from the first stage is treated as a dependent variable, while the exogenous factors are considered to be independent variables. The exogenous factors consist of operating systems, organizational form, consumer preference and size. The results showed that the mutual company as well as the takaful system demonstrate better risk management performance than their stock and conventional system counterparts. In addition, size is also a significant indicator for risk management efficiency in which the larger insurer/takaful operator exhibits better risk management performance than the smaller one. However, consumer preference is found to be insignificantly correlated with the efficiency of risk management. In contrast, with risk management, organizational form, operating system and size are not indicators of the investment management efficiency, but consumer preference is significantly and positively associated with investment management efficiency.

Original languageEnglish
Pages (from-to)1439-1450
Number of pages12
JournalSains Malaysiana
Volume43
Issue number9
Publication statusPublished - 1 Sep 2014

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Factors
Insurer
Risk management
Investment management
Data envelopment analysis
Consumer preferences
Management performance
Organizational form
Operator
Regression analysis
Exogenous variables
Tobit regression

Keywords

  • Efficiency
  • Exogenous factors
  • Risk and investment management
  • Two-stage DEA

ASJC Scopus subject areas

  • General

Cite this

Two-stage DEA method in identifying the exogenous factors of insurers' risk and investment management efficiency. / Yakob, Rubayah; Yusop, Zulkornain; Radam, Alias; Ismail, Noriszura.

In: Sains Malaysiana, Vol. 43, No. 9, 01.09.2014, p. 1439-1450.

Research output: Contribution to journalArticle

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