Title: Examining the resilience of UAE to decline in oil prices - the case of the insurance sector

Authors: Pallavi Kishore; Mariam Aslam

Addresses: Department of Accounting and Finance, School of Business, Middlesex University Dubai, Dubai, UAE ' Department of Accounting and Finance, School of Business, Middlesex University Dubai, Dubai, UAE

Abstract: The sharp fall in oil prices from $112/barrel in 2014 to $59/barrel in 2019 impacted many economies in the world in both positive and negative manner. United Arab Emirates (UAE) has been seeking diversification to reduce its reliance on oil revenues and expects higher growth from non-oil revenues in 2020. This study aims to examine the resilience of UAE to decline in oil prices with the insurance sector as a representative sector of the economy This study involves calculations and comparisons of financial ratios pre- and post-fall in oil prices in the UAE. Parametric test results indicate that while the change in investment and efficiency ratios is statistically significant, profitability, efficiency and gearing ratios have been quite stable in the period. Despite the overall slowdown in the insurance industry, the sector has been mostly resistant to the drop in oil prices. This resilience can be attributed to the ongoing efforts of UAE leadership to diversify away from an oil-based economy.

Keywords: insurance sector; oil prices; parametric test; profitability; ratio analysis; United Arab Emirates; UAE.

DOI: 10.1504/IJSSOC.2021.10045726

International Journal of Sustainable Society, 2021 Vol.13 No.4, pp.317 - 336

Received: 14 Oct 2020
Accepted: 21 Oct 2021

Published online: 11 Mar 2022 *

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