Takaful as a catalyst for sustainable communities: a socio-economic analysis of demand and inclusion

Muye, Ibrahim, Hassan, A.F.S., Karbhari, Yusuf ORCID: https://orcid.org/0000-0003-4513-0928 and Asutay, Mehmet 2026. Takaful as a catalyst for sustainable communities: a socio-economic analysis of demand and inclusion. Thaker, H.M.T, Taghizadeh-Hesary, F., Thaker, Mohammed A. M. T. and Pitchay, A.A., eds. Ethical Finance for a Sustainable and Just Transition, Springer Nature,

Full text not available from this repository.

Abstract

Takaful, a Shariah-compliant system of risk sharing, represents a distinctive component of Islamic finance and a practical embodiment of ethical finance principles, with considerable potential to foster sustainable, just and inclusive communities. Rooted in values of mutual assistance, social solidarity, transparency, and fairness, Takaful aligns closely with the broader objectives of sustainable finance by promoting risk sharing, social protection, and long-term economic stability. Beyond its religious underpinnings, it offers an alternative financial model that prioritizes collective well-being and responsible financial practices, positioning it as an effective mechanism for enhancing socio-economic resilience in both developing and ageing societies. Despite its global growth, limited scholarly attention has been directed toward the socio-economic conditions influencing its adoption and its role in advancing sustainability at the community level. This chapter investigates the determinants of Takaful demand across 24 countries over a Ten-year period, employing a dynamic Generalized Method of Moments (GMM) framework. The analysis examines how macroeconomic stability, demographic dynamics, and financial sector development shape participation in ethical risk-sharing systems. The findings reveal that higher income levels, price stability, and well-developed financial systems significantly increase Takaful demand. Demographic factors (such as life expectancy, educational attainment, and old-age dependency ratios) also play a critical role in shaping participation. Notably, religiosity does not emerge as a statistically significant determinant, suggesting that Takaful’s appeal extends beyond faith-based motivations to its functional value in financial planning, risk mitigation, and sustainable livelihood security. By situating Takaful within the broader discourse on ethical and sustainable finance, this chapter highlights its contribution to financial inclusion, social equity, and community resilience. The results highlight that the expansion of Islamic financial systems is driven less by religious adherence alone and more by enabling socio-economic environments that support ethical participation and sustainable engagement. These insights carry important implications for policymakers and practitioners seeking to leverage Islamic finance as a strategic tool for advancing a just, inclusive, and sustainability-oriented economic transition.

Item Type:	Book Section
Status:	In Press
Schools:	Schools > Business (Including Economics)
Publisher:	Springer Nature
Funders:	n/a
Date of First Compliant Deposit:	8 October 2026
Date of Acceptance:	10 July 2026
Last Modified:	09 Oct 2026 11:30
URI:	https://orca.cardiff.ac.uk/id/eprint/190083

Actions (repository staff only)

Edit Item