Browsing by Author "Gitau, Kimacia"

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    Does Size Shield? Examining the Moderating Role of Firm Size on Market Risk–Profitability Nexus among Kenyan Insurers
    (INTERNATIONAL JOURNALS OF ACADEMICS & RESEARCH, 2025) Gitau, Kimacia; Wamugo, Lucy; Omagwa, Job
    The insurance industry constitutes a critical pillar of the non-bank financial sector and remains integral to sustaining economic development in both emerging and advanced markets. In Kenya, persistent pressures on profitability have been evident, with at least nine insurers experiencing severe financial distress leading to collapse over the past ten years. This study examined whether firm size moderates the relationship between liquidity risk and credit risk in shaping the profitability of insurance companies in Kenya. The inquiry was anchored on key theoretical frameworks, namely Modern Portfolio Theory, Agency Theory and Institutional Theory. A positivist philosophical orientation and an explanatory research design informed the methodological choices. The target population comprised all 55 insurers licensed by the Insurance Regulatory Authority (IRA) as at 31 December 2022. The study utilized secondary data derived from audited financial statements accessed through IRA and the Association of Kenya Insurers (AKI) repositories for the period 2014–2022, complemented by data from the Central Bank of Kenya and the Kenya National Bureau of Statistics. Analytical procedures included descriptive statistics, panel regression modelling, and Pearson’s correlation analysis to evaluate the associations among the study variables. The findings revealed that firm size did not exert a statistically significant moderating effect, as it did not materially alter the model’s decision rule. This suggests that the influence of interest rate, inflation and foreign exchange risks on return on equity (ROE) and return on assets (ROA) remained relatively uniform across insurers irrespective of their asset base. The study recommends that insurance companies in Kenya should implement comprehensive and standardized risk management practices irrespective of organisational size.