Family Takaful in developing countries: the case of Middle East and North Africa (MENA)

Abstract

Purpose -The purpose of this paper is to investigate the driving forces (economics and socio-demographic) that influence family Takaful demand in the Middle East and North Africa (MENA) region, using a sample of 15 countries from the MENA.Design/methodology/approach -The authors use multivariate analysis, bootstrapping and generalised method of moments techniques. They first examine a full model that combines all variables; second, a model that controls for product market factors; and finally, a model that controls for sociodemographic factors. They further separate all models into linear and log-linear demand functions.Findings -The authors demonstrate that the relationship between the demand for family Takaful in MENA and Islamic banking deposits, education, dependency rate, female life expectancy and Muslim population is significantly positive. On the other hand, the significant factors that are inversely related to the demand for family Takaful in MENA are inflation, financial development and male life expectancy.Research limitation/implications -The crucial limitation of this study is the amount of data available in regards to the dependent variable, family Takaful contributions. Consequently, to improve the understanding in explaining the family Takaful demand in MENA, further research can take advantage of expanding the variables that were omitted in this research as a consequence of the unavailability of data. Some of the possible influential variables can include government social security expenditure, legal system and government policies, price of Takaful and level of competition within the Takaful and insurance industry.Originality/value -It is obvious that there are very few studies that focus on the MENA market, and indeed, none of them gives attention to the factors that influence demand for family Takaful. While this study is expected to provide more understanding and awareness on the concept of Takaful and the factors that influence its demand, the authors hope that it would encourage more studies on various issues on the Takaful industry so as to help researchers to understand more aspects of this new emerging business.

The impact of Coronavirus (COVID-19) outbreak on faith-based investments: An original analysis

“…In the case of financial characteristics, Shariah complaint indexes are characterised by low leverage and low account receivables, which reduce the financial risks and vulnerabilities related to periods of crisis such as COVID-19 ( Farooq and Alahkam, 2016 ). Hence, extensive attention has been devoted to such faith-based investments ( Hussain et al, 2019 , Alam and Seifzadeh, 2020 , Zandi et al, 2019 , Sherif, 2016 , Sherif and Erkol, 2017 , Rifqi, 0000 , Sherif and Hussnain, 2017 , Kalimullina, 2020 , Sadeghi et al, 2008 , Derigs and Marzban, 2008 , Alotaibi and Hariri, 2020 , Seyyed et al, 2020 , Tahir and Ibrahim, 2020 , Akguc and Al Rahahleh, 2020 , Ahmad et al, 2020 , Fu et al, 2020 , Castro et al, 2020 ).…”

An investigation of the effect of customer beliefs on the intention to participate in family Takaful schemes

“…In addition to that, the penetration rate for general takaful is still increasing owing to the fact that it is mandatory to have this type of insurance for every vehicle (Haroon, et al, 2016). However, this is not the case for family takaful schemes (FTSs) in the UAE, specifically where FTS has remained underdeveloped, with a penetration rate of less than 5 per cent (Milliman, 2017;Sherif and Hussnain, 2017;Oxford Business Group, 2018;Al-Amri, 2015). This underdevelopment can be attributed to two perspectives: from the "industry" perspective, underdeveloped legal and regulatory support systems are the main reasons for low takaful penetration in the country (Sherif and Hussnain, 2017) and from the "customer" perspective, factors that contribute to a low penetration rate include low awareness, little knowledge, adverse perceptions, negative word of mouth and budget constraints.…”

Sukuk and conventional bonds: shareholder wealth perspective

“…Today, Islamic finance has grown from its former “niche” product status and expanded to over 60 markets/countries. With total ethical or Shariah compliant-based financial assets reportedly exceeding $1.3tn, ethical or Islamic mutual funds are estimated to register about $500bn, and the issuance of Sukuk totalled $94bn in 2013 (Sherif and Shaairi, 2013; Sherif and Hussnain, 2017).…”