Review of takaful performance
| Authors | Journal | Method | Findings |
|---|---|---|---|
| Alshammari et al. (2019a, b) | Research in international business and finance | Stochastic frontier cost function | The relationship between competition and efficiency is positive and supports the quiet life (QL) hypothesis where managers in a less competitive market may utilize the market power of their firms and reduce their efforts |
| Alshammari et al. (2019b) | Economic systems | Stochastic frontier cost function | The relationship between oil prices and efficiency is negative and insignificant in the insurance industry. However, the differences in the financial market have a positive impact on the takaful business |
| Lee et al. (2019) | IMEFM | Two-stage data envelopment analysis (DEA) and panel regression | Family takaful companies are more cost-efficient than general takaful companies. Allocative efficiency causes the reduction of allocative efficiency of general takaful companies. Corporate governance also influences the cost efficiency of takaful companies |
| Ahmad et al. (2019) | Malaysian journal of consumer and family economics | Panel regression | Liquidity and lagged GDP (Gross Domestic Product) is found to be significantly predicting the investment performance of Islamic insurance companies |
| Benyoussef and Hemrit (2019) | Cogent economics and finance | DEA | Study finds that the takaful companies are more efficient than the cooperative insurance companies |
| Almulhim (2019) | Cogent business and management | Two-stage DEA | The average efficiency score for takaful and conventional insurance companies has decreased |
| Benlagha and Hemrit (2018) | Asia–Pacific financial markets | DCC-GARCH | Volatility responds asymmetrically to shocks with the persistence of variance in the stock return data, supporting the presence of irrational behavior and the effectiveness of a cross-market diversification strategy |
| Guendouz and Ouassaf (2018) | Academy of accounting and financial studies journal | Panel regression | Age, size, written premium growth rate and loss ratio have significant effects on the profitability of takaful companies |
| Karbhari et al. (2018) | Journal of international financial markets, institutions and money | DEA | Non-executive directors, audit committees and product diversification do not improve technical efficiency. Instead, audit committees and regulatory jurisdiction tend to reduce scale efficiency |
| Taib et al. (2018a) | Academy of accounting and financial studies journal | DEA | The overall insurance industry in Pakistan was enjoying an increase in the total factor productivity during the period. Change in factor productivity for the takaful companies was better than insurance firms |
| Daud et al. (2018) | International journal of business performance management | Correlation and regression | The takaful operator is proactively achieving their vision by the center of attention on the Islamic leaders' qualities |
| Ahmad and Lukman (2017) | ISRA IJIF | Descriptive analysis | Emphasis on takāful value propositions apart from its Sharīʿah compliance status is needed to attract corporates as respondents were found to be indifferent on Sharīʿah compliance status of their protection |
| Abduh and ZeinIsma (2017) | JIABR | Time series regression | The determinants that are positively related to equity-to-asset ratio (EAR) of family takaful include contribution growth, investment income, takaful leverage, liquidity and Islamic equity index |
| Boulanouar and Alqahtani (2016) | IMEFM | OLS regression | Under-pricing not only exists but also is among the highest in the world (45%), which contradicts the literature on initial public offerings (IPOs)' pricing in highly regulated sectors. Regarding the Sharia compliance effect, they find that it does not significantly reduce insurance offerings' under-pricing |
| Al-Amri (2015) | Humanomics | DEA | The takaful insurance industry in gulf country council GCC is highly technical and pure technical efficient. The United Arab Emirates (UAE) and Qatar score the highest technical efficiency, while Saudi Arabia and the UAE are the most cost-efficient among the GCC countries |
| Yakob et al. (2015) | Investment management and financial innovations | SBM-DEA and Tobit model | The investment management efficiency of insurers and takaful operators was moderate. The heterogeneity of investment management efficiency declined during the study period, and this is particularly encouraging because it shows that the insurers and takaful operators are converging towards the best practices |
| Kader et al. (2014) | International review of financial analysis | DEA | Average levels of cost efficiency in takaful insurance markets mirror the efficiency in developed non-life insurance markets. The relative influence of board composition, such as the proportion of non-executive directors on the board, on takaful insurers' cost efficiency depends on its interaction with other firm-specific characteristics, such as board size |
| Yakob et al. (2014) | Sains Malaysiana | Two-stage DEA | The mutual company and the takaful system demonstrate better risk management performance than their stock and conventional system counterparts. Firm size is positively related to the risk management efficiency of takaful |
| Hamid and Rahman (2011) | Australian journal of basic and applied sciences | Multiple regression | There is a relationship between commitment, motivation and attitudes with performance |
| Kader et al. (2010) | Geneva papers on risk and insurance: Issues and practice | DEA | Non-executive directors and separating the Chief executive officer and Chairman functions do not improve cost efficiency. However, the board size, firm size and product specialization have positive effects on the cost efficiency of takaful insurers |
| Authors | Journal | Method | Findings |
|---|---|---|---|
| Research in international business and finance | Stochastic frontier cost function | The relationship between competition and efficiency is positive and supports the quiet life (QL) hypothesis where managers in a less competitive market may utilize the market power of their firms and reduce their efforts | |
| Economic systems | Stochastic frontier cost function | The relationship between oil prices and efficiency is negative and insignificant in the insurance industry. However, the differences in the financial market have a positive impact on the takaful business | |
| IMEFM | Two-stage data envelopment analysis (DEA) and panel regression | Family takaful companies are more cost-efficient than general takaful companies. Allocative efficiency causes the reduction of allocative efficiency of general takaful companies. Corporate governance also influences the cost efficiency of takaful companies | |
| Malaysian journal of consumer and family economics | Panel regression | Liquidity and lagged GDP (Gross Domestic Product) is found to be significantly predicting the investment performance of Islamic insurance companies | |
| Cogent economics and finance | DEA | Study finds that the takaful companies are more efficient than the cooperative insurance companies | |
| Cogent business and management | Two-stage DEA | The average efficiency score for takaful and conventional insurance companies has decreased | |
| Asia–Pacific financial markets | DCC-GARCH | Volatility responds asymmetrically to shocks with the persistence of variance in the stock return data, supporting the presence of irrational behavior and the effectiveness of a cross-market diversification strategy | |
| Academy of accounting and financial studies journal | Panel regression | Age, size, written premium growth rate and loss ratio have significant effects on the profitability of takaful companies | |
| Journal of international financial markets, institutions and money | DEA | Non-executive directors, audit committees and product diversification do not improve technical efficiency. Instead, audit committees and regulatory jurisdiction tend to reduce scale efficiency | |
| Academy of accounting and financial studies journal | DEA | The overall insurance industry in Pakistan was enjoying an increase in the total factor productivity during the period. Change in factor productivity for the takaful companies was better than insurance firms | |
| International journal of business performance management | Correlation and regression | The takaful operator is proactively achieving their vision by the center of attention on the Islamic leaders' qualities | |
| ISRA IJIF | Descriptive analysis | Emphasis on takāful value propositions apart from its Sharīʿah compliance status is needed to attract corporates as respondents were found to be indifferent on Sharīʿah compliance status of their protection | |
| JIABR | Time series regression | The determinants that are positively related to equity-to-asset ratio (EAR) of family takaful include contribution growth, investment income, takaful leverage, liquidity and Islamic equity index | |
| IMEFM | OLS regression | Under-pricing not only exists but also is among the highest in the world (45%), which contradicts the literature on initial public offerings (IPOs)' pricing in highly regulated sectors. Regarding the Sharia compliance effect, they find that it does not significantly reduce insurance offerings' under-pricing | |
| Humanomics | DEA | The takaful insurance industry in gulf country council GCC is highly technical and pure technical efficient. The United Arab Emirates (UAE) and Qatar score the highest technical efficiency, while Saudi Arabia and the UAE are the most cost-efficient among the GCC countries | |
| Investment management and financial innovations | SBM-DEA and Tobit model | The investment management efficiency of insurers and takaful operators was moderate. The heterogeneity of investment management efficiency declined during the study period, and this is particularly encouraging because it shows that the insurers and takaful operators are converging towards the best practices | |
| International review of financial analysis | DEA | Average levels of cost efficiency in takaful insurance markets mirror the efficiency in developed non-life insurance markets. The relative influence of board composition, such as the proportion of non-executive directors on the board, on takaful insurers' cost efficiency depends on its interaction with other firm-specific characteristics, such as board size | |
| Sains Malaysiana | Two-stage DEA | The mutual company and the takaful system demonstrate better risk management performance than their stock and conventional system counterparts. Firm size is positively related to the risk management efficiency of takaful | |
| Australian journal of basic and applied sciences | Multiple regression | There is a relationship between commitment, motivation and attitudes with performance | |
| Geneva papers on risk and insurance: Issues and practice | DEA | Non-executive directors and separating the Chief executive officer and Chairman functions do not improve cost efficiency. However, the board size, firm size and product specialization have positive effects on the cost efficiency of takaful insurers |
Note(s): DEA = Data Envelopment Analysis; DCC‐GARCH = Dynamic Conditinal Correlation Generalized Autoregressive Conditional Heteroscedasticity; SBM‐DEA = Slack Based Measure of Data Envelopment Analysis; GDP = Gross Domestic Product; GCC = Gulf Country Council; UAE = United Arab Emirates
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