The impact of competition on cost efficiency of insurance and takaful sectors: evidence from GCC markets based on the stochastic frontier analysis

In recent years, competition in the insurance sector has increased due to the number of players added by the emergence of takaful. This paper examines the impact of competition on the cost efficiency of conventional insurance and takaful sectors in Gulf Cooperation Council (GCC) countries between 2009–2016 using a stochastic frontier cost function. Overall, results suggest that the relationship between competition and efficiency is positive and supports the Quiet Life (QL) hypothesis where managers in a less competitive market may utilise the market power of their firms and reduce their efforts. However, importantly, there are differences between takaful operators and conventional insurers in this respect. The relationship between competition and efficiency turns out to be negative where conventional insurance is concerned, and positive only for takaful. The positive relationship between competition and cost efficiency may encourage policy makers and regulators to support a competitive insurance industry which should improve efficiency. However, they should be aware of the degree of competition and use restrictions and requirement for market entry carefully

Systematic review on takaful and retakaful windows: a regulatory development perspective

This paper reviews the regulatory developments of takaful and retakaful windows in the international regulatory bodies and selected jurisdictions. The takaful and retakaful window operations as a business model has been adopted in some countries such as Indonesia, Nigeria, Pakistan and Turkey to achieve certain objectives, including encouraging financial inclusion, tapping a new market segment, and boosting competitiveness. On the flip side, takaful and retakaful window operations are banned by the regulators in other countries such as Brunei, Qatar and Saudi Arabia due to concerns on adherence to Shariah governance, and the performance of standalone full-fledged takaful operators, which have the capability of handling the demands of their respective markets. The paper investigates the takaful and retakaful window operations in the six jurisdictions i.e. Indonesia, Pakistan, Turkey, Nigeria, Kenya and Bangladesh. It also discusses the current regulatory development of transferring the takaful and retakaful windows business into full-fledged takaful players in Indonesia and Turkey, and the decision to maintain the windows model as the ideal model in Pakistan

A three-way analysis of the relationship between the USD value and the prices of oil and gold: A wavelet analysis

This study examines the relationships among oil prices, gold prices, and the USD real exchange rate. It adopts the wavelet approach as a nonlinear causality technique to decompose the data into various scales over time. Higher-order coherence and partial coherence were used to identify the lead-lag effect and mutual coherence function among the variables. The results show that changes in the USD exchange rate influence the prices of oil and gold negatively in the short- and medium-term. While in the long-term, the oil price has a negative impact on the value of the USD. Oil and gold are significantly linked and correlated because their prices are determined in USD. The findings of this paper have significant implications, particularly for risk management