Aims of this study are two folds; first, to investigate the effect of capital structure on the performance of insurance companies in Palestine and second, to test whether this relationship depends on the diversity of the insurance portfolios (product diversification and claims diversification). Balanced panel data was utilized from seven insurance companies operating in Palestine from 2010 to 2018 to estimate the model of the study. Results revealed negative effect of leverage on the performance of insurance firms whereas diversification of the insurance portfolio reduces the negative impact of the financial leverage on financial performance. The results imply that diversification enables insurance companies to take more risks. This paper contributed to existing literature by adding the moderating effect of products and claims diversity on the relationship between capital structure and financial performance. The study findings direct management to focus on the product and claims diversity as a way to reduce financial risk

Conference Title

“The Challenges of the Palestinian Economy in the Face of Political Pressure and the Repercussions of the Corona Crisis”. The Third Conference of the Faculty of Economics and Social Sciences, An-Najah National University, Sunday 11/4/2021

Conference Country

Palestine

Conference Date

May 11, 2021 - April 11, 2021

Conference Sponsor

An-Najah National University