This study identifies the determinants of profitability in the life insurance industry of Ghana. The study also examines the relationship among the three measures of insurers' profitability, which are investment income, underwriting profit and the overall (total) net profit. The financial statements of ten (10) life insurance companies covering a period of eleven years (2000 to 2010) were sampled and analyzed through panel regression. The findings indicate that whereas gross written premiums have a positive relationship with insurers' sales profitability, its relationship with investment income is a negative one. Also, the results showed that life insurers have been incurring large underwriting losses due to overtrading and price undercutting. The results further revealed a setting-off rather than a complementary relationship between underwriting profit and investment income towards the enhancement of the overall profitability of life insurers. The policy implications of this study for the stakeholders of the life insurance industry are enormous. For instance, insurers must have well resourced actuary departments to perform price validation of all policies in order to prevent overtrading and price undercutting by insurance marketing agents. In addition, the intention of the NIC to adopt a risk-based approach in its supervision is not only timely but a very significant move that will improve upon the accounting and records keeping standards of the industry as well as the governance and risk management structures of the sector. This study is the first of its kind about the life insurance market of Ghana. It therefore adds more to literature and opens the debate for more empirical studies in this area of life underwriters.

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This research was set to examine the factors influencing the willingness and the likelihood of Ghanaians to accept the capitation payment system under the National Health Insurance Scheme. Data was collected through the random sampling method in all the ten regions of Ghana. A probit estimation with marginal effects was adopted to examine the factors influencing the willingness and the likelihood while the generalized Blinder-Oaxaca decomposition was used to examine the extent to which individual characteristics influence the acceptance gap between high income and low-income earners. Our results indicated that, at the individual level, high income, being employed, awareness and smaller household size were the significant factors influencing the willingness and the likelihood to accept capitation. We also observed that the acceptance gap between high income and low-income earners was largely influenced by unexplained factors other than individual characteristics of high income earners. Since the willingness and the likelihood to accept capitation are mixed across regions and largely dependent on high incomes, the intention to roll out and implement the capitation system should be as a complementary payment system to the already existing one, being the diagnosis related grouping. We recommend that the current payment system, the diagnosis-related-grouping be maintained and complemented with capitation while measures to reduce, if not eliminate, the abuse associated with it be put in place.Electronic supplementary materialThe online version of this article (10.1186/s13561-017-0175-1) contains supplementary material, which is available to authorized users.

Purpose The purpose of this paper is to examine if credit rationing persists even in the era of financial liberalization, the extent to which individual, firm and loan characteristics influence the rationing behavior of commercial banks and whether the agricultural sector is discriminated against in the commercial bank credit market. Design/methodology/approach The study employed a probit model with marginal effects and a generalized Blinder-Oaxaca decomposition estimation on a randomly selected data of 1,239 entrepreneurs from eight commercial banks’ credit records about their individual, firm and loan characteristics. Findings The study revealed that credit rationing persists and that applying for a relatively longer payment period, providing collateral and guarantor, being illiterate, being relatively older and being in the agricultural sector increases the likelihood of being credit rationed, while having some relationship with the bank, having non-mandatory savings and applying from a bank with relatively high interest rates reduce the likelihood of being credit rationed. The study also revealed a credit gap of 17.77 percent and a positive discrimination against borrowers in the agricultural sector as the gap was largely being influenced by unexplained factors. Research limitations/implications The research was intended to cover a large number of commercial banks in Ghana. However, most of the banks were unwilling to provide such information about their borrowers; hence, the research was limited to only eight commercial banks who provided the author with the information needed for the study. Practical implications The study concludes that policies that enhance human capital, women, and older access to credit and agricultural-oriented financial services and others, will go a long way to reduce rationing and increase access to credit, especially to the agricultural sector. Social implications The research proposes the use of group lending as a form of collateral and monitoring to ease risks and default, and hence supports sustainable funding to increase access and outreach. Originality/value The paper looks at the comprehensive way about the various factors determining credit rationing in that it considers not only the individual, economic/firm and loan characteristics but also the extent to which discrimination toward the agricultural sector exists in the commercial banks credit market.

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