Purpose: The purpose of this paper is to identify the driving forces that influence family Takaful demand in Malaysia. The paper examines various identified and available economics and socio‐demographic variables.Design/methodology/approach: Using ordinary least square (OLS) and generalised method of moments (GMM) techniques, the paper investigates the significance of the identified economic and socio‐demographic factors in determining the consumption of family Takaful. The paper first examines a full model that combines all variables; second, a model that controls for product market factors; and finally, a model that controls for socio‐demographic factors. Following Anderson and Nevin, Haberman, Lenten and Rulli and Josa the paper further separates all models into linear and log‐linear demand functions.Findings: The paper demonstrates that income, Islamic banking development, education, dependency ratio and Muslim population factors are positively related to Takaful demand. On the other hand, inflation, real interest rate, financial development and life expectancy appear to be the significant factors that adversely influence the total family Takaful consumption.Research limitations/implications: The major limitation of this paper is the small sample size. Therefore, future studies may expand the variables omitted in this study due to unavailability of data, which may be influential in explaining the family Takaful demand in Malaysia. Possible influential variables may include government social security expenditure, price of Takaful and level of competition within the Takaful and insurance industry. Research should also be conducted on the impact of the legal system and government policies on the demand for family Takaful in the country. Finally, the study focuses solely on the determinants of demand for family Takaful. Nevertheless, the supply‐side of the equation should not be neglected and should be incorporated in future studies.Originality/value: It is obvious that there are very few studies that focus on the Malaysian market and indeed, none of them gives attention to the factors that influence demand for family Takaful. In this regard, this study contributes in filling the gaps in the scope and coverage of studies in similar area. While this study is expected to provide more understanding and awareness on the concept of Takaful and the factors that influence its demand, the authors hope that it would encourage more studies on various issues on the Takaful industry so as to help researchers to understand more aspects of this new emerging business.

Purpose: The purpose of this paper is to investigate the impact of the IndonesiaShariah-compliant Stock Index (ISSI) on the performance of included shares. In essence, the authors ask whether the establishment of the ISSI provides abnormal returns for the firms that are not included in the Jakarta Index.Design/methodology/approach: The authors use an event study methodology to estimate cumulative abnormal returns in the days surrounding the event to examine the relationship betweenShariah-compliant investments and stock returns. The estimation window of 90 trading days prior to the event (−30) to day 60 after (+60) is adopted. They also use a range of investment performance measures to provide new evidence on whether faith-based ethical investments generate superior performance compared to their unscreened benchmarks.Findings: Using daily returns, the Indonesia ISSI and panel data model, the findings show that the inclusion of the ISSI has a positive impact on the financial performance of the included shares during the 41-day event window. The evidence also suggests that the ethical investment has a significant influence on the performance of stock market returns.Research limitations/implications: This study offers insights to policymakers, investors and fund managers interested in the indices’ performance. A key conclusion that could be derived by bodies that regulate Islamic products and services is that investors are not only concerned about what is profitable but also what makes their investments ethical.Originality/value: Although the global growth of the Islamic capital market products and services has been tremendous in recent years, very few studies focus on the Indonesian market and indeed, none of them devote sufficient attention toShariah-compliant investments and stock returns.

Purpose: This study aims to comprehensively examine the stock market effects of announcements by firms to issue conventional bonds versus Sukuk. In addition, the authors investigate whether the choice of instrument depends on the tax status and government backing of the issuing firm. They split the sample into whole (2000-2015), pre-crisis (2000-2007) and post-crisis (2010-2015) subsamples. Design/methodology/approach: The authors use event study methodology, market model and FTSE Bursa Malaysia EMAS index on 14 different event windows of which five are symmetric and nine are asymmetric. Further, parametric and distribution-free tests are used to investigate the difference of cumulative abnormal returns when using the two instruments (Sukuk and conventional bonds). For the choice of issuing conventional bonds or Sukuk, Heckman procedure is employed to control for the self-selection of the announcement effects. Findings: The analysis indicates only insignificant difference in reaction to Sukuk and conventional bond issuances for the overall period and pre-crisis period. However, and importantly, they find strong evidence supporting the Malaysian stock abnormal return reaction to Sukuk compared to conventional bond issuances after the global financial crisis. Interestingly, they find that tax incentives and government backing are significant determinants in issuing Sukuk over conventional bonds. Such evidence is confirmed when using a wide range of robustness checks including four different market indices and both parametric and non-parametric tests. Research limitations/implications: The empirical analysis is subject to limitations. First, the sample is limited to Sukuk issues domiciled in Malaysia. Second, given that Sukuk are collateralized whereas conventional bonds are not, it would only seem logical for the former to be issued by riskier firms whereas the latter would be issued by stronger firms with stable cash flows. The future research can explore this issue some more. Finally, comparing Sukuk with other similar ethical sources of traded capital may provide insights into the globalization of such economic, trade and financial reforms in and outside Malaysia. Originality/value: To the author’s knowledge, no research has been conducted studying the differential and conflicting results to announcement of Sukuk issuance in the literature, nor the stock market effects of announcements to issue Sukuk over the pre-crisis (2000-2007) and post-crisis (2010-2015) periods. Thus, the study attempts to assess previous findings and contribute additional evidence that investigates the issue in rich setting.