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Croatian Operational Research Review, Vol. 4 No. 1, 2013.

Original scientific paper

THE PERSISTENCE OF INSURERS PROFITABILITY

Maja Pervan ; Faculty of Economics Split, University of Split, Split, Croatia
Josip Arnerić orcid id orcid.org/0000-0002-2901-2609 ; Faculty of Economics Zagreb, University of Zagreb, Zagreb, Croatia
Marijana Ćurak orcid id orcid.org/0000-0003-3427-7051 ; Faculty of Economics Split, University of Split, Split, Croatia

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Abstract

Most of the academic researches have analyzed the persistence of profit for the manufacturing and (non-financial) services sector. These studies were mainly conducted in advance market economies. In order to shed some light on the issue of persistence in corporate rates of return, this research aims to examine the persistence of profitability of financial entities i.e. non-life insurance companies operating in an emerging market economy, Croatia. In order to determine persistence of insurers’ profitability, a Markov Chains stochastic process is applied on the profitability classes that were formulated based on
the changes of insurers’ ROA (return on assets) indicator during the period from 2002 to 2011. The empirical results showed that profit persistence was more likely to occur within moderate profit classes/states.

Keywords

Persistence of profitability; Insurance industry; Croatia

Hrčak ID:

97392

URI

https://hrcak.srce.hr/97392

Publication date:

1.2.2013.

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