Pilgrims fund board and employees provident fund as financial institutions: a comparative study of performance (1983 - 2004)

Pilgrims Fund Board (PFB) - more popularly known as Tabung Haji (Pilgrims Fund or Pilgrimage Fund) despite the introduction of TH as its shorthand in 1997 - is a dual­role statutory body. It was established in 1963 with the objective of facilitating Malaysian Muslims to perform haj by pooling and investing their savings in profitable economic activities which are in accordance with Islamic principles. The basic function of Tabung Haji is however, ha} management: managing and providing various services and facilities for Malaysian Muslims while they are preparing for, or on, pilgrimage. Another dual-role deposit-taking institution which is influential in the management and development of the Malaysian socio-economy is Employees Provident Fund (EPF). Founded in 1951, the EPF is the world's first national provident fund, a mechanism devised for providing lump-sum payments to the Malaysian workers (employees) at the time of their retirement. Being the country's largest contractual savings institution, Employees Provident Fund serves as the central pillar of the Malaysian system of social policy and social security. Being the country's largest contractual savings institution, the EPF is a crucial financial intermediary that provides a key source of domestic funds for financing the Government development projects. Further, through its investments, trading, lending and outsourcing activities, the EPF has contributed enormously towards the development and stability of Malaysian capital market. In a nutshell, notwithstanding that the PFB and the EPF were created with their specific roles, to enable them to meet these roles effectively, they have to operate as financial institutions: They are savings institutions; they are institutional investors. The present study examines and compares the performances of Pilgrim Fund Board and Employees Provident Fund as financial institutions. The study rotates around the null hypothesis that the perfonnance of the PFB is not significantly different from that of the EPF. The sample period for the study is twenty-two years; that is, 1983 through 2004. To examine and analyse the data, several measurement or analytical tools are utilized. The data are inter alia, examined by utilising the following quantitative tools: some selected financial ratios, arithmetic mean, geometric mean, standard deviation, correlation coefficient, cumulative wealth index and Sharpe measures.