Impact of Covid-19 on Islamic versus Conventional Insurance Performance in OIC

Almoaheem Yazeed (), Hassan M. Kabir and Hasan Rashedul ()
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Almoaheem Yazeed: Administrative Sciences Department, Community College, King Saud University, Riyadh, Saudi Arabia
Hassan M. Kabir: University of New Orleans, New Orleans, USA
Hasan Rashedul: School of Economics, Finance and Accounting, 2706 Coventry University , Coventry, UK

Review of Middle East Economics and Finance, 2025, vol. 21, issue 2, 157-184

Abstract: This paper investigates the impact of the Covid-19 pandemic on the performance of Islamic insurance versus conventional insurance firms in the Organization of Islamic Cooperation (OIC) member countries. Using Dynamic Capabilities theory and Resource Dependence Theory, the study examines the reasons behind the more significant performance reduction in Islamic insurance firms during the pandemic. Using firm- and country-level panel data from 425 insurance firms for 7 years (2016–2022) and employing OLS, RE, and GMM regression models, the analysis focuses on Return of Assets (ROA) and Asset Turnover Ratio as performance measures. The results indicate that Islamic insurance firms exhibited a greater reduction in performance, during the pandemic, compared to conventional firms, primarily due to weaker liquidity management and operational flexibility. Cash from operating activities (COA) was the key factor of lack of liquidity management, contributing to the underperformance of Islamic insurance firms during the pandemic. The findings highlight the need for improved liquidity management approaches in Islamic insurance firms to increase their resilience to future economic shocks.

Keywords: Islamic insurance; conventional insurance; Covid-19 pandemic; firm performance; OIC; economic shocks (search for similar items in EconPapers)
JEL-codes: G1 G22 L25 (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1515/rmeef-2024-0035

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