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A comparison of Islamic and conventional insurance demand: Worldwide evidence during the Global Financial Crisis

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  • Akhter, Waheed
  • Pappas, Vasileios
  • Khan, Saad Ullah

Abstract

In this paper we compare the Islamic insurance industry (Takaful) to the conventional insurance across 14 countries over the 2005–2014 period. Our methodology relies on panel regressions and accounts for the periods during and post the global financial crisis (GFC). Specifically, we investigate: i) the difference in the insurance demand dynamics of the two insurance types; ii) if Islamic insurance demand has been boosted in the period that followed the crisis. To allow for cross-country heterogeneities we form sub-samples of high/low insurance regions and ASEAN/Middle East. We find Islamic and conventional insurance demand to be negatively affected by GDP/capita, albeit the Islamic showing a greater resilience during crisis. A negative link between conventional insurance and saving rate shows that conventional saving products work as substitutes to conventional insurance. Higher average income is positively (negatively) related to Islamic insurance demand in the Middle East (ASEAN), a finding plausibly related to the different practices relating to Islamic finance in the two regions.

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  • Akhter, Waheed & Pappas, Vasileios & Khan, Saad Ullah, 2017. "A comparison of Islamic and conventional insurance demand: Worldwide evidence during the Global Financial Crisis," Research in International Business and Finance, Elsevier, vol. 42(C), pages 1401-1412.
    • Handle: RePEc:eee:riibaf:v:42:y:2017:i:c:p:1401-1412
    DOI: 10.1016/j.ribaf.2017.07.079
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    Cited by:

    1. Rini Cahyandari & Kalfin & Sukono & Sri Purwani & Dewi Ratnasari & Titin Herawati & Sutiono Mahdi, 2023. "The Development of Sharia Insurance and Its Future Sustainability in Risk Management: A Systematic Literature Review," Sustainability, MDPI, vol. 15(10), pages 1-23, May.
    2. Rym Charef El ANSARI & Riadh El ABED, 2020. "The dependence and dynamic correlation between Islamic and conventional insurances and stock market: A multivariate short memory approach," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania - AGER, vol. 0(3(624), A), pages 213-222, Autumn.
    3. Khan, Ashraf & Hassan, M. Kabir & Paltrinieri, Andrea & Dreassi, Alberto & Bahoo, Salman, 2020. "A bibliometric review of takaful literature," International Review of Economics & Finance, Elsevier, vol. 69(C), pages 389-405.
    4. Noureddine Benlagha & Wael Hemrit, 2018. "The Dynamic and Dependence of Takaful and Conventional Stock Return Behaviours: Evidence from the Insurance Industry in Saudi Arabia," Asia-Pacific Financial Markets, Springer;Japanese Association of Financial Economics and Engineering, vol. 25(4), pages 285-323, December.
    5. Alshammari, Ahmad Alrazni & Syed Jaafar Alhabshi, Syed Musa bin & Saiti, Buerhan, 2019. "The impact of competition on cost efficiency of insurance and takaful sectors: Evidence from GCC markets based on the Stochastic Frontier Analysis," Research in International Business and Finance, Elsevier, vol. 47(C), pages 410-427.
    6. Asif Ahmed & Rossazana Ab-Rahim, 2021. "A Literature Review on the Relatiohship between Competition and Efficiency for Takaful and Conventional Insurance," Journal of Public Administration and Governance, Macrothink Institute, vol. 11(4), pages 130139-1301, December.

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    More about this item

    Keywords

    Islamic insurance (Takaful); Global Financial Crisis; ASEAN; Middle East; Demographics;
    All these keywords.

    JEL classification:

    • G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies; Actuarial Studies

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