Mohd Aziz, Nor Izzati and Kassim, Salina (2020) The contributions of takaful industry towards economic growth, savings and investment in Malaysia. International Journal of Advanced Research in Economics and Finance (IJAREF), 2 (3). pp. 31-38. E-ISSN 2682-812X
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Abstract
Takaful has made significant contributions to the Islamic financial market in Malaysia, of which the three leading indicators of economic growth include savings, investment, and income. The Takaful industry has a positive effect on the economic growth and development in Malaysia through healthy savings, proper allocation of assets (investments) and increasing national income. The market penetration of Malaysian Islamic insurance in 2020 is expected to surpass 16% and continue to grow in future. Given the wealth of individuals has been increasing through greater financial awareness, this has allowed individuals to spend more on Islamic insurance. As compared to conventional insurance, Islamic insurance is a popular instrument for saving among Malaysians, due to its Shariah-compliant characteristic. However, it is not religion-based insurance but inclusive of all races, religions and beliefs. Almost all Takaful products in the financial market have addon benefits which can be purchased with basic policies. The inclusion of savings and investment elements on Takaful products has made it more complex and positive in providing early preparation (in case of emergency) to policyholders. Takaful has a strong fund pooling capacity, helps to induce investment contributing to the country’s Gross Domestic Product (GDP) in boosting the nation’s income. Therefore, this paper has investigated the impact of the Takaful industry on the GDP of Malaysia through savings and investment elements. The analysis of Takaful products is also undertaken with the inclusion of investments that are linked and offered by Takaful operators. In conducting this study, a questionnaire was developed and distributed to respondents, thereafter collected and analysed using SmartPLS, which found a significant relationship between all variables. The results suggest that the savings and investment behaviour of individuals, in addition to investment-linked Takaful, have influenced the demand for Takaful. It is anticipated that the findings and contribution of this study will benefit practitioners and decision-makers to recognise the behaviour of individuals toward savings and investment opportunities and providing further insight towards the many benefits offered by Takaful. Lastly, the results of this study may also help in contributing to the nation’s economic growth and development.
| Item Type: | Article (Journal) |
|---|---|
| Additional Information: | 4600/87378 |
| Uncontrolled Keywords: | Islamic insurance, takaful, investment-linked takaful, economic growth |
| Subjects: | H Social Sciences > HG Finance > HG3368 Islamic Banking and Finance H Social Sciences > HG Finance > HG8719 Islamic Insurance Takaful |
| Kulliyyahs/Centres/Divisions/Institutes (Can select more than one option. Press CONTROL button): | Institute of Islamic Banking & Finance (IIiBF) |
| Depositing User: | Prof. Dr. Salina Kassim |
| Date Deposited: | 30 Dec 2020 21:44 |
| Last Modified: | 30 Dec 2020 21:44 |
| URI: | http://irep.iium.edu.my/id/eprint/87378 |
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