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The efficacy of zakat institutions in Malaysia amid COVID-19: the case of the Federal Territory

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Date
2021
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Abstract
The devastating effects of the COVID-19 outbreak on the economy and people's standard of living have drawn attention to zakat institutions. The efficiency with which zakat institutions manage collection and distribution is critical because it will assist to mitigate the negative effects of economic downturns and benefit people who are afflicted in their communities. This study assesses the performance of zakat institutions in the management of zakat funds, which includes both collecting and distribution functions, during the COVID-19 period. This is significant given the enormous responsibility that zakat institutions bear, ensuring that funds are managed as efficiently as possible so that the appropriate beneficiaries receive aid during this difficult period. The efficiency of zakat management in the Federal Territory in Malaysia were assessed by using a two-stage linked Data Envelopment Analysis (DEA) model. Both stages are distinguished by their separate inputs and outputs. The study finds that in 2020, PPZ achieved 100% allocative and cost-efficiency. As for technical efficiency, PPZ only achieved 94.6% efficiency. Regarding Baitulmal, the distribution unit did not achieve full technical, allocative and cost efficiency in 2020. The study suggests zakat institutions should enhance transparency to achieve higher efficiency. Transparency reduces information asymmetry between zakat institutions and the public. Consequently, trust of the public towards zakat institutions will be improved. Additionally, zakat institutions are recommended to allocate more budget towards technology development as it will increase the efficiency of zakat management.
Keywords
Zakat institutions , Malaysia , COVID-19 , Project paper (MSc)
Citation
Ahmad Shukri, A. S. (2021). The efficacy of zakat institutions in Malaysia amid COVID-19: the case of the Federal Territory (Master dissertation). INCEIF, Kuala Lumpur. Retrieved from https://ikr.inceif.org/handle/INCEIF/3989
Publisher
INCEIF

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