Islamic Insurance and Human Development: Panel Data Analysis with Application of Robust Random Effect Model
Year: 2026
Type: article
Abstract: This study investigates the relationship between Islamic insurance (Takaful) and human development within the selected member countries of the Organization of Islamic Cooperation (OIC) over the period 2015–2021, which includes Türkiye, Kuwait, Qatar, the United Arab Emirates, Oman, Malaysia, Indonesia, Saudi Arabia, and Nigeria. It questions the relationship between Takaful development and the Human Development Index (HDI), as well as the interaction between institutional factors and other Islamic financial instruments within this relationship. The study finds a positive and significant relationship between Takaful and HDI, based on panel data and a robust random-effects estimation approach. The Human Development Index (HDI) was chosen over Multidimensional Poverty Index (MPI) due to its annual availability, its close relationship with parameters influenced by Takaful, and its suitability for cross-country comparisons. The results further show that the relationship between FDI and HDI is positive when moderated by government effectiveness; the relationship between Sukuk development and HDI appears to run parallel to the profitability indicators of Islamic banks. However, this potential channel is inferred from separate model estimations rather than a formal mediation framework. In contrast, FDI interacted with political stability does not exhibit a statistically significant association with HDI. The study fills the gap in the body of Islamic finance-development literature by introducing the concept of Takaful, which is a relatively under-researched area, and the concept of HDI, which is a comprehensive welfare measure beyond economic growth and also offers evidence on the role of institutional quality and potential transmission mechanisms between Islamic finance and human development.
Institutions: Kabul University, Selçuk University
Language: English
Subfield: Accounting
Domain: Social Sciences
Open Access status: diamond
OpenAlex ID: W7204783441