Do Capital Structure, Retakaful, and Loss Ratio affect to Syariah Insurance Liquidity?

Alfiya Putri, Falikhatun Falikhatun


Syariah Insurance has an important role in mitigating the risk of Islamic banking so that Islamic banks can quickly recover from the problems they face, while Islamic banking facilitates Islamic insurance in its transactions so that it is more accessible to the public. This paper aims to dig deeper into the influence of capital structure, retakaful, and loss ratio on the liquidity ratio of Islamic insurance. Using panel data from 24 companies from 2013 to 2019, this study uses the Hausman test to distinguish between fixed and random effects. The Cash Ratio is used as a proxy for the liquidity ratio. The sample of sharia insurance companies is from OIC countries such as Indonesia, Malaysia, UAE, Pakistan, Bangladesh. Our findings reveal that statistically there is a significant influence between capital structure, retakaful, and the loss ratio on the liquidity ratio. Partially, capital structure has a negative effect, while retakaful and loss ratios have no effect on sharia insurance liquidity in OIC member countries


cash ratio, loss ratio, retakaful, OIC Countries

Full Text:



AAOIFI. (2010). Accounting, Auditing and Governance Standards for Islamic Financial Institutions, AAOIFI, Bahrain.

Akotey, Oscar Joseph, Frank G. Sackey, Lordina Amoah, and Richard Frimpong Manso. (2013). The Financial Performance of Life Insurance Companies in Ghana. Journal of Risk Finance 14 (3): 286–302.

Aljamaan, B. Eid. (2018). Capital Structure: Definition, Determinants, Theories and Link with Performance Literature Review. European Journal of Accounting and Finance Research,6(2): 49 – 72.

Alkhan, A. Mansoor & M. Kabir Hassan. (2020). Takaful Operators: Analysing Segregated Accounts between Operator/Participants. Journal of Islamic Accounting and Business Research,11(9): 1649-1664.

Almajali, A. Yassin, Sameer A. Alamro & Yahya Z. Al-Soub. (2012). Factors Affecting The Financial Performance of Jordanian Insurance Companies Listed at Amman Stock Exchange. Journal of Management Research, 4(2): 266 – 289.

Al-Qur’an dan Terjemahan. (2019). Jakarta: Kementrian Agama RI.

Alshammari, A. Ahmad, S. M. S. Jaafar Alhabsi, and Buerhan Saiti. (2018). A comparative Study of Historical and Current Development of The GCC Insurance and Takaful Industry. Jornal of Islamic Marketing. 9(2): 356 – 369.

Arshad, Zubair, M. Yasir Gondal, and T. Hussain. (2016). Factor of Takaful Companies in Pakistan. Asian Journal of Research in Banking and Finance 6(1): 14 – 21.

Ayuba, H., Abdu J. Bambale, Murtala A. Ibrahim & S. M. Sulaiman. (2019). Effects of Financial Performance, Capital Structure and Firm Size on Firms’ Value of Insurance Companies in Nigeria. Journal of Finance, Accounting and Management, 10(1): 57-74.

Borch, Karl. (1967). The Theory of Risk. Journal of the Royal Statistical Society Series B (Methodological), 29(3): 432–467.

Burca, A. M., & Batrinca, G. (2014). The Determinants of Financial Performance in the Romanian Insurance Market. International Journal of Academic Research in Accounting, Finance and Management Sciences, 4(1).

Çekrezi, A. (2015). Determinants of Financial Performance of the Insurance Companies : a Case of Albania. International Journal of Economics, Commerce and Management, III(4), 1–10.

Derbali, A., & Jamel, L. (2018). Determinants of Performance of Tunisia insurance companies: Case of life insurance. International Journal of Productivity and Quality Management, 24(4), 531–542.

Durrah, O., Abdul A. A. Rahman, Syed A. Jamil & Nour A. Ghafeer. (2016). Exploring the Relationship between Liquidity Ratios and Indicators of Financial Performance: An Analytical Study on Food Industrial Companies Listed in Amman Bursa. International Journal of Economics and Financial Issues, 6(2): 435-441.

Feinman, Jay M. (2015). The Regulation of Insurance Claim Practices. UC Irvine Law Review, 5(6): 1319 - 1353.

Guandouz, Abdelkrim. (2018). Determinants of Saudi takaful Insurance Companies Profitablity. Academy of Accounting and Financial Studies Journal ,22(5): 1 - 24.

Haron, R & Khairunisah Ibrahim. (2012). Target Capital Structure and Speed of Adjustment: Panel Data Evidence on Malaysia Shariah Compliant Securities. International Journal of Economics, Management and Accounting, 20(2): 87-107.

Hasan, H.A., Abbas, S.K. and Shehzadi, A. (2018). Takafuls’ Anatomy and Potential in Pakistan. Lap Lambert Academic Publishing, Beau Bassin.

Hassan, H. Ali. (2019). Takaful Models: Origin, Progression and Future. Journal of Islamic Marketing, 11(6): 1801-1819.

Htay, Sheila N. N., M. Arif, Younes S., Hanna R. Zaharin & Ibarahim S. (2013). Accounting, Auditing, and Governance for Takaful Operations. Wiley: Singapore.

_______________., Mustapha H., W. Zamri W. Ismail & Syed A. Salman. (2014). Retakaful (Islamic Reinsurance): Historical, Shari'ah and Operational, Perspective. World Applied Sciences Journal, 185 - 190.

Ibrahim, M. Dahlan, F. Salleh & Z. Awang. (2015). The Effects of Financial Factors on Takaful Demand in Malaysia. Journal of Entrepreneurship and Business, 3(1): 17 - 29.

Ismail, Muhaizam. (2013) Determinants of Financial Performance: The Case of General Takaful and Insurance Companies in Malaysia. International Review of Business Research Paper, 9(6): 111 - 130.

Johnson, Richard E. (1977). Reinsurance: Theory, the New Applications, and the Future. The Journal of Risk and Insurance, 44(1): 55-66.

Kahane, Y. & M. Moshe Porat. (1984). Financial Analysis of Underwriting Results - A Corrected Approach to Loss Ratio Analysis, with a Special Reference to Inflation. The Journal of Risk and Insurance, 51(4): 710-719.

Kantakji, M., Syed O. Al Habshi & Bahrom A. Hamid. (2020) What Drives The Financial Performance of Genral Takaful Companies. Journal of Islamic Accounting and Business Research.

Kaplan, R.S. & Norton, P.D. (1992). The Balanced Scorecard: Measures That Drive Performance. Harvard Business Review,70(1): 71-79.

Kaur Bawa, S., & Chattha, S. (2013). Financial Performance of Life Insurers in Indian Insurance Industry. Pacific Business Review International, 6(5): 44–52.

Kementrian Agama Republik Indonesia. (2020). Qur’an Kemenag: Terjemahan dan Tafsir.

Khan, I., Rahman, N.N.B.A., Yusoff, M.Y.Z.B.M. et al. (2016). History, problems, and prospects of Islamic insurance (Takaful) in Bangladesh. SpringerPlus 5, 785.

Lee Hsu-Hua & Lee Chen-Ying. (2012). An Analysis of Reinsurance and Firm Performance: Evidence from the Taiwan Property-Liability Insurance Industry. The Geneva Papers, 37, 467–484.

Lee, S. (2008). Ownership Structure and Financial Performance: Evidence from Panel Data of South korea. Corporate Ownership and Control ,1-30.

Ma, Y. and Elango, B. (2008). When do International Operations Lead to Improved Performance? An Analysis of Property-Liability Insurer. Risk Management and Insurance Reviews, 11(1): 141–155.

Malaysian Takaful Association. (2017). Annual Report 2017.

Masci, P. (2011). The History of Insurance: Risk, Uncertainty and Entrepreneurship. Journal of the Washington Institute of China Studies, 5(3): 25-68.

Milliman Research Report. (2017). Global Takaful Report 2017.

Modigliani, F & Miller, M.H. (1958). The Cost of Capital, Corporation Finance and The Theory of Investment. The American Economic Review, 13(3): 261-297.

Muhammat, A. Afif, Mohammad N. Jaafar, and Sharifah F. S. Alwi. (2017). General Takaful Claims: An experience of Takaful Operator in Malaysia. Journal of Emerging Economies & Islamic Research,5(4): 18 - 26.

Myers, Stewart C. (1984). The Capital Structure Puzzle. The Journal of Finance, 39(3): 575-592.

Otoritas Jasa Keuangan. (2015). Roadmap IKBN Syariah 2015 - 2019. 1 Desember 2015.

Peterson, W., Gijsbers, G. & Wilks, M. (2003). An Organizational Performance Assessment System for Agricultural Research Organizations: Concepts, Methods, and Procedures. ISNAR Research Management Guidelines No. 7, The Hague: International Service for National Agricultural Research.

Rahim, A., Shagufta A., Waqas I., M. Muddassar K., Shahid M. & M. Siddique. (2021). The Effect of Financial Leverage on The Islamic Banks’ Performance in Asian Countries. Journal of Contemporary Issues in Business and Government, 27(1): 628 - 657.

Rely, G. (2018). The Effect of Financial Leverage on Financial Performance Towards Firms Size. South East Asia Journal of Contemporary Business, Economics and Law, 17 : 11 - 19.

Roni, S. Mat, S. Ismail & Muhammad M. A. Fatah. (2016). Liquidity and Claim Takaful Industry. Journal of Business Innovation, 1(2): 141 -150.

Securities and Exchange Commission. (2019). Securities and Exchange Commission Annual Report 2019. Februari 2020.

Standing Commitee for Economic and Commercial Coorperation of The Organization of Islamic Coorporation. (2019). Improving the Takaful Sector in Islamic Countries. Oktober 2019.

Statista. (2020). Value of Takaful Assets Worldwide from 2012 - 2018. Diambil dari (Diakses 21 Desember 2020).

Wani, A. Ahmad & Showket A. Dar. (2015). Relationship between Financial Risk and Financil Performance: An Insight of Indian Insurance Industry. International Journal of Science and Research, 4(11): 1424 - 1433.


  • There are currently no refbacks.