FINANCIAL SOUNDNESS OF TAKAFUL VERSUS CONVENTIONAL INSURANCE IN MALAYSIA: A CAMEL-BASED ANALYSIS
DOI:
https://doi.org/10.55197/qjssh.v7si4.1649Keywords:
takaful, conventional insurance, CAMEL framework, profitability, panel data analysisAbstract
The insurance sector plays a critical role in supporting economic stability, financial protection, and risk management in Malaysia. Within its dual financial system, Takaful and conventional insurance operate under fundamentally different principles, creating challenges in evaluating and comparing their financial performance. This study aims to assess and compare the financial performance of Takaful and conventional insurance companies in Malaysia using the CAMEL framework, which includes Capital Adequacy, Asset Quality, Management Efficiency, Earnings, and Liquidity. A quantitative research design is employed using secondary data collected from annual reports of selected insurance companies for the period 2019–2024. Descriptive and regression analyses are applied to examine the impact of CAMEL components on financial performance, measured by Return on Assets (ROA). The findings indicate that Takaful operators generally demonstrate stronger capital buffer, liquidity and operational efficiency, while conventional insurers exhibit higher profitability and capital strength. The study contributes to the existing literature by providing a comprehensive and standardized comparison framework and offers practical implications for regulators, investors, and policymakers in enhancing financial stability and governance within Malaysia’s insurance industry.
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Copyright (c) 2026 NOR IZZATI AZMI, NURHUSNA SHARUL BAHARI, NUR SYAZWANI HASAN, PUTRI BALQIS MELIA ASMIDA RUMAIZI, INTAN NUR SYAFIQAH HAIRULNIZAN, NUR ZAHIDAH BAHRUDIN
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