The Contribution of Zakat as an Income Creating Asset in SeJangor and Wilayah Persekutuan, Malaysia

Nor Ghani Md Noor, Abd. Razak Dan and Mohd Ali Mohd noor
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Nor Ghani Md Noor: Faculty of Economics Universiti Kebangsaan Malaysia 43600 UKM Bangi Selangor Darul Ehsan
Abd. Razak Dan: Faculty of Economics Universiti Kebangsaan Malaysia 43600 UKM Bangi Selangor Darnl Ehsan
Mohd Ali Mohd noor: Faculty of Economics Universiti Kebangsaan Malaysia 43600 UKM Bangi Selangor Darul Ehsan

Jurnal Ekonomi Malaysia, 2002, vol. 36, 69-80

Abstract: It was not until recently that the zakat management authorities of several states in Malaysia decided to provide capital assistance to the poor. Foray into the scheme may be partly attributed to the increase in the amount of zakat collection in recent years. To date, a survey of the literature shows that no attempt has so far been made to look into the success or failure of this program in creating viable business entities. Such a study is crucially important since the limited zakat funds must be optimally distributed to maximize the benefits accruing to the poor and needy. In particular, effort has to be made to determine the factors that influence success or failure of the program to guide the distribution of zakat funds in the future. This paper aims at achieving this objective i.e. determining the success factors of micro enterprises funded by zakat funds. Using data obtained from 127 randomly selected respondents who had received capital assistance from the zakat authorities of the slate of Selangor and Wilayah Persekutuan, a logistic regression model is estimated to lest the influence of several hypothesized factors on the probability of success. Several of these factors were chosen based on previous theoretical and empirical works on “conventionally†funded micro enterprises. Results of the econometric analysis shows that gender, age, number of supervisory visits and suitability of prior job experience to project undertaken are statistically significant in determining success and achieving the objective of zakat.

Date: 2002
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