Assessment of talent shortage with government policy support as mediator among Malaysian Islamic banking undergraduates of selected public universities in Malaysia

The increasing talent supply and demand is presumed to alleviate talent shortages in Islamic banking institutions (IBIs). However, this expectation contradicts the reality in IBIs, resulting in a persistent and acute talent shortage paradox. Despite a gradual rise in talent supply from Islamic banking education institutions (IBEIs) and talent demand within IBIs annually, the responsible parties for this discrepancy—whether it be the talent pool itself, IBIs, IBEIs, or the government—remain unsolved. Thus, this study aims to identify the influential factors contributing to talent shortages in Malaysian IBIs. Additionally, it seeks to analyze the effects of these factors on talent shortages and develop a talent development model tailored to address this issue. Through an extensive literature review comprising diverse sources, a conceptual framework called the talent development model for talent shortages in Malaysian IBIs was formulated. This model elucidates the correlation between talent shortages and variables related to talent demand and supply. Subsequently, 380 questionnaires were administered to Islamic banking and finance students in selected Malaysian public universities using multistage sampling. The data obtained from the questionnaires were analyzed using Structural Equation Modeling (SEM) in IBM-SPSS, yielding quantitative results. The findings revealed a significantly critical association between talent supply and talent shortages in Malaysian IBIs, with the curriculum variable exerting a dominant effect on talent supply. The research hypotheses regarding talent demand and supply were supported, exhibiting a significant influence on determining talent shortages. Notably, talent demand and supply variables were found to exert a dominant impact on talent shortages within IBIs. The study underscores the pivotal role of the curriculum in contributing to talent shortages in IBIs. Despite a comprehensive education system facilitating curriculum development, it does not guarantee talent preparedness for the job market. Moreover, the research illuminates the substantial influence of government policies in partially mediating the complex relationship between talent supply, demand, and shortages. Government policies have tangible effects on talent development and retention in the industrial sector. In conclusion, this study’s findings offer significant contributions to the field of talent development in IBIs and IBEIs from theoretical and empirical standpoints. The research presents a unique talent development model aiming to balance the labor market between talent supply and demand.