CAN ZAKAT DISTRIBUTION REDUCE POVERTY RATE? AN EMPIRICAL EVIDENCE FROM PROVINCE ACEH
Keywords:
poverty rate, zakat distributionAbstract
In the perspective of Islamic economics, zakat is viewed as one of the Islamic fiscal policy instruments expected to reduce poverty levels. The institutionalization of zakat management through Baitul Mal in Aceh is anticipated to expedite poverty alleviation efforts in the region. However, the fact remains that the poverty rate in Aceh is relatively higher compared to other regions in western Indonesia. This study investigates the impact of zakat distribution on poverty reduction using panel data from 23 districts and cities in Aceh. The estimation model applied to test the functional relationship between the two variables is panel regression. The research proves that zakat distribution can significantly reduce poverty levels. These findings imply that zakat can be relied upon as a policy instrument to improve the standard of living, particularly in Aceh.
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