EXPLORATION OF AGENT-BASED SIMULATION: THE MULTIPLIER EFFECT OF ZAKAH ON ECONOMIC GROWTH

Diyah Putriani (), Gairuzazmi Mat Ghani () and Mira Kartiwi ()
Additional contact information
Diyah Putriani: Universitas Gadjah Mada, Indonesia
Gairuzazmi Mat Ghani: International Islamic University Malaysia, Malaysia
Mira Kartiwi: International Islamic University Malaysia, Malaysia

Journal of Islamic Monetary Economics and Finance, 2020, vol. 6, issue 3, 667-688

Abstract: Zakatplays an undeniably significant role in social life. The enforcement of zakah in early Islamic history is evidence that it is a powerful tool for fostering economic growth. The economy under the reign of Caliphate Umar Ibn Abdul Azis even achieved a surplus, with no one having the right to receive zakah. Recent studies have attempted to link the role of zakah and economic growth qualitatively by arguing that zakah can contribute to economic development. However, the extent to which it has a multiplier effect on economic growth has not been examined. Considering this research gap, this study examines such an effect on economic growth, as represented by Gross Domestic Product (GDP). To capture the full impact of zakah on aggregate production, two scenarios are conducted, namely the economy with and without zakah. The simulation results show that zakah can promote aggregate production. On the other hand, the economy experiences lower aggregate production when there is no zakah. An agent-based computational model (ABM) simulation is employed to run the simulation. The application of ABM in this study is intended to introduce the use of computational study as an alternative method of developing research in Islamic economics.

Keywords: Zakah; Aggregate production; Bank lending; Agent-based computational model; Islamic economics (search for similar items in EconPapers)
JEL-codes: C61 C63 E23 O10 O49 (search for similar items in EconPapers)
Date: 2020
References: Add references at CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://jimf-bi.org/index.php/JIMF/article/view/1110/822 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:idn:jimfjn:v:6:y:2020:i:3i:p:667-688

DOI: 10.21098/jimf.v6i3.1110

Access Statistics for this article

Journal of Islamic Monetary Economics and Finance is currently edited by Dr. Ali Sakti

More articles in Journal of Islamic Monetary Economics and Finance from Bank Indonesia Contact information at EDIRC.
Bibliographic data for series maintained by Lutzardo Tobing ( this e-mail address is bad, please contact ) and Jimmy Kathon ().