DETERMINANTS OF CAPITAL STRUCTURE THE CASE OF SOME SELECTED INSURANCE COMPANY IN ETHIOPIA

The objective of this study was assessing the determinants of capital structure with reference to insurance companies in Ethiopia. The study adopts an explanatory research design. The study was guided by a quantitative research approach. The necessary data required for this study was secondary data. The secondary data was the audited financial statements of selected insurance companies for the period of 2012 to 2022. The data was collected from the National Bank of Ethiopia. The study used non-probability sampling through a purposive method in order to take sample size. Currently, there are eighteen (18) insurance companies with their respective branch operations in Ethiopia. Based on age and based on years of establishment 8(eight) insurance companies was taken as samples purposively; Ethiopian Insurance Corporation, Africa Insurance Company S.C, Awash Insurance Company S.C, National Insurance Company of Ethiopia S.C, Nile Insurance Company S.C, Nyala Insurance Company S.C, Global Insurance Company S.C, and The United Insurance S.C. The data was analyzed using descriptive statistical techniques like mean, standard deviation, minimum, and maximum. Correlation and regression analyses are also employed. The results revealed that firm age, firm size and liquidity have a positive significant influence on leverage ratio, whereas business risk and exchange rate have a negative significant influence on capital structure. This study was performed using only secondary data. Therefore, the managers of insurance company should consider such variables to maximize the value of the firms and future researchers are advised to do similar studies with the addition of primary data, including qualitative and quantitative variables, which were not included in this study.