The impact of competition on cost efficiency of insurance and takaful sectors: evidence from GCC markets based on the stochastic frontier analysis

In recent years, competition in the insurance sector has increased due to the number of players added by the emergence of takaful. This paper examines the impact of competition on the cost efficiency of conventional insurance and takaful sectors in Gulf Cooperation Council (GCC) countries between 20...

Full description

Bibliographic Details
Main Authors:	Alshammari, Ahmad Alrazni, Syed Jaafar Alhabshi, Syed Musa, Saiti, Buerhan
Format:	Article
Language:	English English English
Published:	Elsevier B.V 2019
Subjects:	HG8011 Insurance
Online Access:	http://irep.iium.edu.my/68335/ http://irep.iium.edu.my/68335/ http://irep.iium.edu.my/68335/ http://irep.iium.edu.my/68335/1/68335%20-%20the%20impact%20of%20competition%20on%20cost%20efficiency.pdf http://irep.iium.edu.my/68335/7/68335_The%20impact%20of%20competition%20on%20cost%20efficiency_SCOPUS.pdf http://irep.iium.edu.my/68335/8/68335_The%20impact%20of%20competition%20on%20cost%20efficiency_WOS.pdf

id	iium-68335
recordtype	eprints
spelling	iium-683352019-08-02T08:23:05Z http://irep.iium.edu.my/68335/ The impact of competition on cost efficiency of insurance and takaful sectors: evidence from GCC markets based on the stochastic frontier analysis Alshammari, Ahmad Alrazni Syed Jaafar Alhabshi, Syed Musa Saiti, Buerhan HG8011 Insurance In recent years, competition in the insurance sector has increased due to the number of players added by the emergence of takaful. This paper examines the impact of competition on the cost efficiency of conventional insurance and takaful sectors in Gulf Cooperation Council (GCC) countries between 2009–2016 using a stochastic frontier cost function. Overall, results suggest that the relationship between competition and efficiency is positive and supports the Quiet Life (QL) hypothesis where managers in a less competitive market may utilise the market power of their firms and reduce their efforts. However, importantly, there are differences between takaful operators and conventional insurers in this respect. The relationship between competition and efficiency turns out to be negative where conventional insurance is concerned, and positive only for takaful. The positive relationship between competition and cost efficiency may encourage policy makers and regulators to support a competitive insurance industry which should improve efficiency. However, they should be aware of the degree of competition and use restrictions and requirement for market entry carefully. Elsevier B.V 2019-01 Article PeerReviewed application/pdf en http://irep.iium.edu.my/68335/1/68335%20-%20the%20impact%20of%20competition%20on%20cost%20efficiency.pdf application/pdf en http://irep.iium.edu.my/68335/7/68335_The%20impact%20of%20competition%20on%20cost%20efficiency_SCOPUS.pdf application/pdf en http://irep.iium.edu.my/68335/8/68335_The%20impact%20of%20competition%20on%20cost%20efficiency_WOS.pdf Alshammari, Ahmad Alrazni and Syed Jaafar Alhabshi, Syed Musa and Saiti, Buerhan (2019) The impact of competition on cost efficiency of insurance and takaful sectors: evidence from GCC markets based on the stochastic frontier analysis. Research in International Business and Finance, 47. pp. 410-427. ISSN 0275-5319 https://www.journals.elsevier.com/research-in-international-business-and-finance https://doi.org/10.1016/j.ribaf.2018.09.003
repository_type	Digital Repository
institution_category	Local University
institution	International Islamic University Malaysia
building	IIUM Repository
collection	Online Access
language	English English English
topic	HG8011 Insurance
spellingShingle	HG8011 Insurance Alshammari, Ahmad Alrazni Syed Jaafar Alhabshi, Syed Musa Saiti, Buerhan The impact of competition on cost efficiency of insurance and takaful sectors: evidence from GCC markets based on the stochastic frontier analysis
description	In recent years, competition in the insurance sector has increased due to the number of players added by the emergence of takaful. This paper examines the impact of competition on the cost efficiency of conventional insurance and takaful sectors in Gulf Cooperation Council (GCC) countries between 2009–2016 using a stochastic frontier cost function. Overall, results suggest that the relationship between competition and efficiency is positive and supports the Quiet Life (QL) hypothesis where managers in a less competitive market may utilise the market power of their firms and reduce their efforts. However, importantly, there are differences between takaful operators and conventional insurers in this respect. The relationship between competition and efficiency turns out to be negative where conventional insurance is concerned, and positive only for takaful. The positive relationship between competition and cost efficiency may encourage policy makers and regulators to support a competitive insurance industry which should improve efficiency. However, they should be aware of the degree of competition and use restrictions and requirement for market entry carefully.
format	Article
author	Alshammari, Ahmad Alrazni Syed Jaafar Alhabshi, Syed Musa Saiti, Buerhan
author_facet	Alshammari, Ahmad Alrazni Syed Jaafar Alhabshi, Syed Musa Saiti, Buerhan
author_sort	Alshammari, Ahmad Alrazni
title	The impact of competition on cost efficiency of insurance and takaful sectors: evidence from GCC markets based on the stochastic frontier analysis
title_short	The impact of competition on cost efficiency of insurance and takaful sectors: evidence from GCC markets based on the stochastic frontier analysis
title_full	The impact of competition on cost efficiency of insurance and takaful sectors: evidence from GCC markets based on the stochastic frontier analysis
title_fullStr	The impact of competition on cost efficiency of insurance and takaful sectors: evidence from GCC markets based on the stochastic frontier analysis
title_full_unstemmed	The impact of competition on cost efficiency of insurance and takaful sectors: evidence from GCC markets based on the stochastic frontier analysis
title_sort	impact of competition on cost efficiency of insurance and takaful sectors: evidence from gcc markets based on the stochastic frontier analysis
publisher	Elsevier B.V
publishDate	2019
url	http://irep.iium.edu.my/68335/ http://irep.iium.edu.my/68335/ http://irep.iium.edu.my/68335/ http://irep.iium.edu.my/68335/1/68335%20-%20the%20impact%20of%20competition%20on%20cost%20efficiency.pdf http://irep.iium.edu.my/68335/7/68335_The%20impact%20of%20competition%20on%20cost%20efficiency_SCOPUS.pdf http://irep.iium.edu.my/68335/8/68335_The%20impact%20of%20competition%20on%20cost%20efficiency_WOS.pdf
first_indexed	2023-09-18T21:36:59Z
last_indexed	2023-09-18T21:36:59Z
_version_	1777412886160736256

The impact of competition on cost efficiency of insurance and takaful sectors: evidence from GCC markets based on the stochastic frontier analysis

Similar Items