The effect of Islamic finance on trade in insurance services in selected countries in the Middle East region

Abstract

Purpose Islamic finance is becoming a core part of the financial services economy in the Middle East countries. There is a strong likelihood that Islamic finance is also driving the expansion of trade in insurance services. However, research on Islamic finance’s effect on trade in insurance services is scant. This study aims to fill this gap by investigating if Islamic finance has promoted trade in insurance services. Design/methodology/approach This study adopts the gravity modelling framework and the panel data estimation procedure in understanding the effects of Islamic finance on trade in insurance. Findings The empirical results reveal a statistically significant positive correlation of Islamic finance with the exports and imports of insurance services. Economic sizes (domestic and trading partners), growth in trading partners, cost of doing business, legal rights and financial freedom are other statistically significant determinants. Research limitations/implications It makes a positive contribution to the Islamic financial services literature. Islamic finance is an integral part of the conventional banking and financial sector in the Middle East that actively fosters the expansion of insurance services that need support, given its essential role in services trade. Originality/value This study is unique as it directs attention to the role of Islamic finance in fostering trade in insurance services within an inclusive modelling framework that has been overlooked in the Islamic finance literature.

Tracing knowledge diffusion flows in Islamic finance research: a main path analysis

“…Parallel to this growth, IF research has garnered increasing interest, yet it is still in a development phase, as indicated by Narayan and Phan (2017). The focus of earlier research includes performance analyses of Islamic banks (Alexakis et al, 2019;Johnes et al, 2014;Kablan and Yousfi, 2016;Mobarek and Kalonov, 2014;Wanke et al, 2016), investigations into their corporate governance system (Jan et al, 2023;Rashid et al, 2023;Toumi and Hamrouni, 2023) and studies on Islamic bond markets (Alam and Ansari, 2020;Azmat et al, 2014;Maghyereh and Awartani, 2016;Tiwari et al, 2023;Uluyol, 2023) and the Islamic insurance system (Al-Fori and Gani, 2022;Bekkin, 2007;Saharuddin et al, 2023). In addition, ethical issues in IF have been explored, with studies focusing on the ethical framework of Islamic financial institutions (Alziyadat and Ahmed, 2019) and the social responsibility roles of Islamic financial institutions (Hassan and Salma Binti Abdul Latiff, 2009;Kanapiyanova et al, 2022;Kotb Abdelrahman Radwan et al, 2023).…”