Shariah Board and Takaful Performance: Mediating Role of corporate social responsibility

Abstract

Abstract This study aims to investigate the impact of Shariah board characteristics ( Sahriah board size, cross-membership, qualification, and reputation) on the performance of takaful insurance providers of distinguishable Muamalah contracts (wakalah and mixt), mediated by corporate social responsibility. Our sample covers 30 Takaful insurances divided into two subsamples: 18 insurance wakalah contracts offered in Southeast Asia (SEA) and 12 insurance mixte contracts offered in GCC over the period 2010–2020. We used the PLSPM method for data analysis. Corporate social responsibility (CSR) activities contribute to the success of takaful insurance. In fact, CSR has a partial mediating effect on the relationship between Shariah board size, qualification, and Takaful performance based on Southeast Asian (SEA) countries and GCC. Furthermore, CSR has a full mediating effect on the relationship between cross-membership and takaful performance in SEA countries and a partial mediating effect on the relationship between cross-membership and takaful performance in GCC countries. Moreover, CSR has a partial mediating effect on the relationship between reputation and Takaful performance in both SEA and GCC countries. This study highlights that CSR is a source of efficiency that enhances Takaful’s performance. Regulators should appreciate this procedure for the formulation of suitable and useful ways to efficiently supervise the operations of Takaful insurance. JEL classification – G22, G3