DETERMINANTS OF FAMILY TAKAFUL IN ASEAN: EVIDENCE FROM BUSINESS UNIT SHARÔ‘ÓH AND FULL-FLEDGED OPERATIONS

Abstract

This study’s aim is to perform an empirical analysis of the determinants that influence the solvency of family takaful enterprises, both at the full-fledged level and within the business unit of SharÊ‘ah compliant entities across countries in ASEAN. The data utilised within the study were obtained from the financial statements annually of 32 family takaful businesses and the World Bank Database, spanning 2017 to 2021. The solvency of an entity is assessed by utilising net assets divided by net contributions, which serve as the dependent variable in this context. According to the findings, a positive relationship exists between solvency and the following variables: profitability, investment ratio, liquidity, and firm size. The impact of wakalah fees on solvency is significantly related negatively. Nevertheless, it is essential to note that there is no inherent connection between GDP and inflation concerning solvency. The family takaful company in ASEAN has a relatively high solvency level. Thus, it can fulfil its obligation in the long run to meet the policyholder’s claim.