Revisiting Socioeconomic Development Hypothesis: Does Zakat Matter for OIC Member Countries?

Aroua Robbana (), Abdessamad Raghibi () and AbdulGafar Olawale Fahm ()
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Aroua Robbana: IIUM
Abdessamad Raghibi: Department of Finance, EMAA Business School
AbdulGafar Olawale Fahm: University of Ilorin

Journal of the Knowledge Economy, 2024, vol. 15, issue 3, No 159, 14379-14404

Abstract: Abstract Zakat, a multidimensional and sustainable institution, wields significant potential for several aspects of a nation’s economy. This study examined, from an empirical point of view, the potential impact of Zakat on economic development with a focus on the OIC member countries. The study employs the pooled OLS regression and fixed effect (as robustness checks) technique for static panels on 50 OIC countries from 1970 to 2020. The finding suggests that Zakat has a positive indirect impact on welfare, human capital development, and shared prosperity on the other hand. These findings enhance the socioeconomic development hypothesis and Zakat nexus in Muslim countries through a virtuous cycle of support to the poorest social categories through stimulating aggregate demand and production. Although the findings of this study hold significant implications for economic growth and development in OIC member states, in particular, the findings also present a new perspective to policymakers and academia who seek to broaden the scope of economic growth and development in other developed and developing countries across the world.

Keywords: Zakat; OIC member countries; Social welfare; Social protection; Economic growth; Human capital development; Shared prosperity; Poverty (search for similar items in EconPapers)
JEL-codes: H23 O11 O15 O43 (search for similar items in EconPapers)
Date: 2024
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DOI: 10.1007/s13132-023-01632-y

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