Title: Analysis of cost efficiency in GCC and Jordan's insurance sectors: DEA approach

Authors: Abderazak Bakhouche; Welcome Sibanda; Randa AlChaar; Mohamed Boulkeroua; Eman Zabalawi

Addresses: Higher Colleges of Technology, Dubai Men's College, Box 15825, Dubai, United Arab Emirates ' Higher Colleges of Technology, Dubai Men's College, Box 15825, Dubai, United Arab Emirates ' Higher Colleges of Technology, Dubai Men's College, Box 15825, Dubai, United Arab Emirates ' Higher Colleges of Technology, Dubai Men's College, Box 15825, Dubai, United Arab Emirates ' Higher Colleges of Technology, Dubai Men's College, Box 15825, Dubai, United Arab Emirates

Abstract: This paper provides a comprehensive analysis of cost efficiency of insurance firms operating in GCC countries and Jordan during 2009-2017. The DEA approach was applied to estimate cost efficiency and its components-allocative, pure technical and scale efficiency, inputs and outputs variables are defined according to the value-added approach, and in the second-stage regression analysis, we test a set of hypotheses on the relationship between efficiency and selected variables capturing firms' heterogeneities and other environmental variables controlling for market structure, economic conditions and governance. The results point to the substantial efficiency improvement potential in all markets under study with large discrepancies in efficiency scores across the GCC countries suggesting divergence and difference stage of sector development and heterogeneity of regulation. The findings reveal that firm-specific variables such as size, profitability, solvency and investment concentration, have impact on efficiency, while no significant difference in efficiency was found between conventional and Takaful insurance firms.

Keywords: cost efficiency; technical efficiency; allocative efficiency; scale efficiency; pure technical efficiency; PTE; data envelopment analysis; DEA; Gulf Cooperation Council; GCC; Jordan; MENA; financial institutions; insurance firms.

DOI: 10.1504/IJBPM.2020.108322

International Journal of Business Performance Management, 2020 Vol.21 No.3, pp.290 - 328

Received: 29 May 2019
Accepted: 21 Oct 2019
Published online: 08 Jul 2020 *

Full-text access for editors Full-text access for subscribers Purchase this article Comment on this article