ISSN: 2222-6990
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Purpose: This study investigated the mediating roles of takaful awareness and takaful product choices in the relationship between micro takaful participation and poverty reduction in Sudan, employing Sen’s (1999) capability approach as a theoretical lens. Methodology: A quantitative research design using PLS-SEM was employed. Data were collected from a sample of 96 Sudanese micro takaful participants and analysed using SmartPLS 3.5. Predictive validity was assessed using PLSpredict, and an importance-performance map analysis (IPMA) was conducted to identify key drivers of poverty reduction. Findings: Results revealed significant positive direct effects of micro takaful on both poverty reduction and takaful product choices. A direct positive effect of takaful product choices on poverty reduction was also observed. However, the hypothesised mediating roles of takaful awareness and product choices were not statistically confirmed, although the indirect effect through product choices was marginal. PLSpredict analysis demonstrated robust predictive validity, especially for poverty reduction and takaful product choices. The IPMA highlighted micro takaful and, to a lesser extent, takaful product choices as key contributors to poverty reduction, while takaful awareness showed limited influence within the model. Implications: The findings highlight the need for interventions beyond simply promoting micro takaful access. Developing targeted strategies to enhance financial literacy, particularly regarding the effective utilisation of diverse takaful product offerings, may be crucial for maximising poverty reduction outcomes. Originality: This study contributes to the limited research on the relationship between micro takaful, takaful literacy, and poverty reduction within a specific cultural and economic context. It provides empirical evidence to inform policy and practice in promoting financial inclusion and poverty alleviation through Islamic microfinance.
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