Academic Proceeding

The Malaysian Takaful industry has experienced encouraging growth since its inception in 1985. Annual growth rate of the industry has been estimated to be around 20%. Despite such impressive rate of growth, it is believed that the market penetration of Takaful is still low. This paper seeks to find the factors influencing Takaful market penetration based on the experience of managers of Takaful operators. Twenty (20) Takaful managers were randomly selected and interviewed. The interviewees pointed out the factors that deter the public from participating in Takaful could be listed as follows: the lack of public awareness in the advantages of Takaful over insurance products, the limited range of product varieties, the shortage of relevant expertise to explain Takaful products, the need to improve the distribution channels and marketing strategies. The paper also suggested several ways of improving Takaful market penetration, namely: the need to develop tailor-made products to suit customer needs according to the different segments of the society, expanding the range of product varieties, extensive training of staff and agents to enhance their products and services, technical and Shari’ah knowledge as well as to intensify promotion for higher level of awareness.

Monetary policy is an important available tool for governments to pursuit macroeconomic objectives. However, the recent financial crisis has revealed the weaknesses of the conventional monetary policy framework. Monetary policy has been found to be a prominent cause of financial instability. Inability of expansionary monetary policy to induce new lending in many economies is considered as evidence of the impairment of conventional monetary policy transmission mechanism. Additionally, the post-crisis diagnostics have revealed that monetary policy failed to address asset market imbalances. A large number of these studies have focused on the reforms of the conventional system. Some suggest major structural changes while others infrastructural. This concept paper is an attempt to search for an alternative and more efficient monetary policy framework, which is also Shariah-compliant for Malaysia. It will also propose risk-sharing instruments as substitute monetary policy tools.

Private equity investing (PE) has experienced a rapid growth on a global scale over the past several decades and has become a significant industry. But while scholars have devoted considerable effort to studying the area of risk capital investing into businesses, research about private equity as an asset class is surprisingly scarce. The aim of this research is to provide a deeper understanding about how differences in organizational characteristics may affect institutional investors’ motives for investing in private equity including Islamic private equity, ways of working, satisfaction with investment performances, and their respective choices of investment strategies for both conventional as well as Islamic private equity. In order to provide a rich and comprehensive understanding of Institutional Investors’ opinions and perceptions, a qualitative study was undertaken based on in-depth interviews with institutional PE fund investors in Malaysia. Based on a comprehensive set of interviews with PE fund investors, in-depth insights about variances in motives for investing in the asset class, ways of working, and investment strategies were acquired. One of the more interesting findings from this study is that there seem to be two significantly divergent investment strategies that lead to satisfactory performances when investing in PE funds: (i) to be a devoted, highly skilled and independent investor, or (ii) to copy the behaviors and decisions of other investors who are perceived as having high skills and thus have attained prominence in the market. This, in turn, suggests that organization-specific characteristics determine which strategy will be the optimal choice for a certain investor.

Mutual help and guarantee have been the ordinary practice of tribal Arabs even before the advent of Islam in Arabia. A similar but refined concept was reinforced by the Qur'an to be adopted by Muslims. It was widely applied in their daily lives. When the Muslims extended their trade by sea to the Far East, the concept of mutual assistance became more prominent and organised to protect their ships, merchandise and even lives from all sorts of dangers and mishaps. The practice by these merchants to put aside a sum of money before setting sail to the Far East for trade as a fund to compensate any loss incurred by any of them became the most prominent practice that led to the birth of what is today known as marine insurance. To circumvent some of the shari'ah non-compliant practices of mainstream insurance is the introduction of the concept of donating part of the participants' contribution which forms the special fund to compensate losses. From then on, the takaful operators started to emerge, first in Sudan and later in other parts of the Muslim world. Several models have been formulated, namely mudharabah, modified mudharabah, wakala and wakala-waqf. The success of the takaful companies around the world has also been strongly influenced by the recent upsurge in the petroleum price that has led to the unprecedented increase in sovereign and private wealth. The recent emergence of re-takaful companies add up further to the rapid growth in takaful operators and funds. Despite the success stories, there are a number of serious challenges facing takaful and retakaful operators which are worth noting.