The potential of Islamic social finance to alleviate poverty in the era of COVID-19: the moderating effect of ethical orientation

Umar Habibu Umar, Abubakar Jamilu Baita, Md Harashid Bin Haron and Sadanu Hamza Kabiru

International Journal of Islamic and Middle Eastern Finance and Management, 2021, vol. 15, issue 2, 255-270

Abstract: Purpose - This paper aims to explore the potential of the awareness and knowledge of Islamic social finance (zakat,waqfand Islamic microfinance) to alleviate poverty during the COVID-19 pandemic with the moderating effect of ethical orientation. Design/methodology/approach - The data were collected through the administration of paper-based and electronic questionnaires to 400 respondents out of which only 277 were found valid for analysis. Findings - The study showed that by direct relationship, the awareness and knowledge of Islamic social finance instruments have a potentially significant positive contribution to poverty alleviation during the COVID-19 pandemic except for zakat that has an insignificant positive contribution. Ethical oriental has also a significant positive contribution. Contrary to expectation, the moderating effect of ethical orientation has changed zakat andwaqfto have significant negative and insignificant positive contributions, respectively. Only Islamic microfinance has endured the moderating effect to continue contributing significantly and positively to the reduction of poverty. Research limitations/implications - The study explored only the potential impact of the awareness and knowledge of Islamic social finance to mitigate the extreme poverty caused by the COVID-19 pandemic in Nigeria. Practical implications - This study clearly showed the need to create enabling laws and policies to support the operations of zakat andwaqfinstitutions to achieve their objectives effectively and efficiently. These two institutions should be integrated with Islamic microfinance for the possibility of getting better outcomes. Social implications - There should be massive campaigns to restore religious, social and political ethics to enhance the socio-economic development of Nigerians based on the principles of brotherhood. Originality/value - This study provides unexpected and unusual results showing the inability of zakat andwaqfinstitutions to alleviate poverty due to poor ethical orientation.

Keywords: Nigeria; Poverty; Islamic social finance (zakat; waqf; Islamic microfinance); COVID-19; Poverty alleviation; Ethical orientation (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:eme:imefmp:imefm-07-2020-0371

DOI: 10.1108/IMEFM-07-2020-0371

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