Abstract
The aim of this paper was to investigate the effect of the gross domestic product (GDP) and population on the investment yield of sharia insurance in Indonesia. This research used a causal research design with Indonesian sharia insurance as the focus. The secondary data were sourced from the Financial Services Authority (OJK) of Indonesia in 2016–2017. The analysis was performed with Smart Partial Least Square (PLS) software and indicated that the GDP did not influence the investment yield; however, the population did influence the investment yield of sharia insurance in Indonesia. The implications of this study are expected to recommend to the Indonesia Financial Services Authority regarding the impact of the GDP and population on the investment yield in Indonesia. In addition, the implication provides support for the Indonesian monetary policy authorities to anticipate the monetary policy by the Fed, regarding dovish and hawkish sentiments, to encourage capital inflows to emerging countries due to the impact on the development of Sharia/Takaful insurance in Indonesia. A social implication is that the sharia insurance industry in Indonesia can develop if the public can enjoy convenience in applying for premiums and ease in receiving sharia insurance claims. The majority of Indonesia's population of Moslems requires an openness in the process. This study takes a sample of different sharia industry characteristics to compare sharia and conventional types of industry.
Highlights
Economic growth is the development of activities in the economy that cause goods and services to be produced in society
The results show that population was a significant variable on investment yield
There is an implication to support the Indonesian monetary policy authorities to anticipate the monetary policy by the Fed, regarding dovish and hawkish sentiments, to encourage Capital Inflows to emerging countries as this can impact the development of sharia/Takaful insurance in Indonesia
Summary
Economic growth is the development of activities in the economy that cause goods and services to be produced in society. The ability of a country to produce goods and services can increase over time. This ability is a factor of production, which can experience an increase in output and quality (Abdulkader, 2005 & Ahmed, 2010). The political stability, government economic policy, natural resources possessed, quantity and capability of labor, the availability of persistent entrepreneurs, and the ability to develop and use modern technology are some of the important factors affecting economic growth. The income increase is measured in real terms, meaning that it is expressed in constant prices This simultaneously describes the remuneration operating in the area (land, capital, labor, and technology) which means that it can roughly illustrate the prosperity of the area. The economy in China was estimated to have limited growth by 6.5% in 2016 due to deceleration despite private sector investment and interest rates being maintained low
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