Purpose: This study examines how capital structure relates to the financial performance of life and non-life insurance companies in Vietnam, an emerging market where the sector has grown quickly but has received limited empirical attention.
Methodology: A balanced panel of 27 insurers over 2018-2024 (189 firm-year observations) was analyzed. Performance is measured by Return on Assets (ROA) and Return on Equity (ROE), and capital structure by Leverage (LEV) and the Short-Term Liabilities Ratio (STD), with firm size, asset turnover, revenue growth, and insurance type as controls. After specification and diagnostic tests, fixed-effects models with Driscoll-Kraay standard errors were estimated.
Results: Leverage is positively and significantly related to both ROA and ROE, while the short-term liabilities ratio has no significant effect. Asset turnover raises ROE, whereas firm size and revenue growth lower it.
Conclusions: The drivers of profitability differ depending on whether performance is judged from total assets or from shareholders' equity, and effective liability management and asset use matter more than liability maturity.
Limitations: The sample is limited to 27 insurers, and the fixed-effects design cannot estimate the effect of insurance type.
Contributions: The study adds evidence from an emerging insurance market and separates the level of leverage from its maturity composition.