Takaful Insurance as A New Mechanism for Managing Credit Risks in Islamic Banks: An Analytical Study in Light of the Pakistani Experience and International Models

Abstract

This study aims to analyze the reality of the Takaful insurance industry and its role in managing credit risks in Islamic banks, by addressing its concept, types and spread in the Islamic world, highlighting its importance as a legitimate alternative to commercial insurance and a tool supporting financial stability, while reviewing the Pakistani experience and some leading international models. The study found that Takaful insurance is an effective tool to support financial stability and enhancing risk management, thanks to its compatibility with the principles of Islamic Sharia and the development of its products and regulatory frameworks. It also showed that the Pakistani experience represents an important model in the integration of Takaful insurance with the Islamic banking industry, while international experiences confirm the importance of innovation, product development, and digital transformation in expanding the scope of this industry The study concluded that strengthening the role of Takaful insurance depends on innovation, developing legislation, and enhancing integration between Takaful companies and Islamic banks to achieve sustainable growth of Islamic finance.