Rationalizing the Takaful Organizational Form with Institutional Theory

Alhalboni, M.; Ebrahim, M.S.; Jatmiko, W.

doi:10.4337/9781800880900.00036

Rationalizing the Takaful Organizational Form with Institutional Theory

Alhalboni, M.; Ebrahim, M.S.; Jatmiko, W.

Authors

M. Alhalboni

Professor Muhammed Ebrahim m.s.ebrahim@durham.ac.uk
Professor

W. Jatmiko

Contributors

D. Nguyen
Editor

Abstract

This article examines the organizational structure of Takaful ('Islamic' insurance) as it constitutes an interesting case study of a relatively inefficient system that has grown in popularity. This challenges the neoclassical economics view that the most efficient organizational form succeeds. We employ institutional theory to shed light on this puzzle. We realize the resolve of Muslim religious scholars and their political Islamic compatriots to regain legitimacy is the primary reason why this inefficient institution exists. Our results in this form of insurance lead us to question the ideology of blending religious values in the broad financial services sector. We conclude that it will ultimately lead to financial regression, perpetuate the further decline of the emerging Muslim economies and reinforce the spatial disparities between them and the developed world.

Citation

Alhalboni, M., Ebrahim, M., & Jatmiko, W. (2022). Rationalizing the Takaful Organizational Form with Institutional Theory. In D. Nguyen (Ed.), Handbook of Banking and Finance in Emerging Markets (506-522). Edward Elgar Publishing. https://doi.org/10.4337/9781800880900.00036

Acceptance Date	Aug 16, 2021
Online Publication Date	Oct 14, 2022
Publication Date	2022
Deposit Date	Aug 18, 2021
Publicly Available Date	Apr 14, 2023
Publisher	Edward Elgar Publishing
Pages	506-522
Series Title	Research Handbooks in Money and Finance
Book Title	Handbook of Banking and Finance in Emerging Markets
ISBN	9781800880894
DOI	https://doi.org/10.4337/9781800880900.00036
Public URL	https://durham-repository.worktribe.com/output/1653588

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Copyright Statement
This is a draft chapter. The final version is available in Handbook of Banking and Finance in Emerging Markets, edited by Nguyen, D., 2022, Edward Elgar Publishing Ltd
https://doi.org/10.4337/9781800880900.00036
The material cannot be used for any other purpose without further permission of the publisher, and is for private use only.