The Effect of Capital Structure on the Profitability of Insurance Companies in Nigeria

Student: Abideen Sunday Akande (Project, 2025)
Department of Accounting
Osun State University, Osogbo, Osun State

Abstract

AbstractThis study examined the impact of capital structure on the profitability of quoted insurance companies in Nigeria from 2012 to 2022. Variables such as Return on Equity, Total Debt Ratio, Debt to Equity Ratio, and Liquidity Ratio were used. Data were obtained from the financial statements of insurance companies listed on the Nigerian Stock Exchange. The study employed descriptive statistics, correlation, unit root test, heteroscedasticity test, and Ordinary Least Squares (OLS) regression. Findings show that capital structure significantly influences profitability. High leverage reduces profit due to financial risk, while a balanced debt–equity mix improves profitability. The study recommends maintaining an optimal debt level that balances leverage benefits with financial risks.

Keywords
profitability ratio financial capital structure insurance companies equity leverage.
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