Family Takaful in developing countries: the case of Middle East and North Africa (MENA)

Purpose - The purpose of this paper is to investigate the driving forces (economics and socio-demographic) that influence family Takaful demand in the Middle East and North Africa (MENA) region, using a sample of 15 countries from the MENA. Design/methodology/approach - The authors use multivariate analysis, bootstrapping and generalised method of moments techniques. They first examine a full model that combines all variables; second, a model that controls for product market factors; and finally, a model that controls for socio-demographic factors. They further separate all models into linear and log-linear demand functions. Findings - The authors demonstrate that the relationship between the demand for family Takaful in MENA and Islamic banking deposits, education, dependency rate, female life expectancy and Muslim population is significantly positive. On the other hand, the significant factors that are inversely related to the demand for family Takaful in MENA are inflation, financial development and male life expectancy. Research limitation/implications - The crucial limitation of this study is the amount of data available in regards to the dependent variable, family Takaful contributions. Consequently, to improve the understanding in explaining the family Takaful demand in MENA, further research can take advantage of expanding the variables that were omitted in this research as a consequence of the unavailability of data. Some of the possible influential variables can include government social security expenditure, legal system and government policies, price of Takaful and level of competition within the Takaful and insurance industry. Originality/value - It is obvious that there are very few studies that focus on the MENA market, and indeed, none of them gives attention to the factors that influence demand for family Takaful. While this study is expected to provide more understanding and awareness on the concept of Takaful and the factors that influence its demand, the authors hope that it would encourage more studies on various issues on the Takaful industry so as to help researchers to understand more aspects of this new emerging business.