 Zakah as an Islamic Micro-Financing Mechanism to Productive Zakah RecipientsPatmawati Ibrahim and Ruziah Ghazali Asian Economic and Financial Review, 2014, vol. 4, issue 1, 117-125 Abstract: There are various forms of zakah distribution practiced by the zakah institutions. One of them is the distribution of zakah in a form of business capital given to productive zakah recipients. This form of zakah distribution is recognized as micro-financing mechanism. Thus, this paper attempts to analyse the potential of zakah fund as a source of Islamic micro financing to productive zakah recipients. The analysis is divided into several parts. Firstly, this paper discusses on the rationale of zakah fund as a source of micro financing to small Muslim entrepreneurs. It is then followed by the feasibility study of zakah as a micro financing mechanism. Thirdly, this paper shares the practicality analysis of the mechanism by sharing the experience of Selangor Zakah Board (Lembaga Zakat Selangor - LZS). In addition, it also highlights the problems and challenges of LZS in performing the role of ‘micro-finance institution’. Lastly, suggestion on the proper mechanism of zakah micro financing to ensure its effectiveness is given in the final part of the paper. This is to ensure that the objectives of zakah in alleviating poverty and reducing income inequality are met. Keywords: Economic development; Islamic economics; Zakah; Micro-finance; Poverty; Income distribution (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:asi:aeafrj:v:4:y:2014:i:1:p:117-125:id:1147 Access Statistics for this article More articles in Asian Economic and Financial Review from Asian Economic and Social Society |
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