International Centre for Education in Islamic Finance

Purpose This study aims to provide an overview of Malaysia’s readiness to implement blockchain technology in zakat management. Although zakat institutions in Malaysia use technology in their management systems, the crisis of trust towards zakat institutions and the need for more comprehensive and consolidated asnaf data persist; thus, blockchain technology is proposed as a solution. Design/methodology/approach This research adopts a case study approach involving the majority of zakat institutions in Malaysia to explore the potential and challenges of facilitating the future implementation of blockchain technology in the zakat management system. Findings This research indicates that the prospects for implementing blockchain technology in the zakat management system are positive, given the government’s launch of the national blockchain roadmap, the potential of blockchain technology for identity verification and zakat institutions’ readiness to provide the necessary infrastructure. However, some challenges must be urgently addressed to ensure successful implementation, including regulatory challenges and blockchain literacy among zakat stakeholders. Research limitations/implications This paper serves as a guiding protocol for zakat institutions in Malaysia to implement blockchain technology in their management processes, anticipating that it will become necessary. Originality/value This study contributes to the field by integrating the resource-based view, maqāṣid al-sharīʿah and Islamic governance principles to evaluate blockchain adoption within Malaysia’s decentralised zakat system critically. Unlike earlier studies that primarily emphasised blockchain’s technical features, this research situates the discussion within a fragmented regulatory environment and grounds its analysis in stakeholder perspectives and national policy initiatives. In doing so, it advances a context-specific and theoretically grounded contribution to the literature on Islamic social finance and digital transformation in faith-based institutions.

HRMARS - This study examines the relationship between exchange rate pass-through and inflation in Tanzania from 1988 to 2023, highlighting the effects of exchange rate fluctuations on consumer prices within an open economy. The Vector Error Correction Model indicates a significant long-term relationship between exchange rates and inflation. Granger causality tests demonstrate a bidirectional causal relationship between exchange rates and inflation, alongside a unidirectional influence from exchange rates to money supply, highlighting the significant impact of exchange rate dynamics on inflationary trends. Impulse response functions show that while the immediate effect of exchange rate shocks on inflation is modest, it intensifies over time and stabilises thereafter. Variance decomposition further identifies money supply as a key driver of inflation, particularly in the long run. Prior to liberalisation, ERPT was weak and statistically insignificant; post-liberalisation, however, it became negative and persistent, suggesting that stronger monetary policy frameworks and enhanced central bank independence have moderated inflationary pressures. The findings highlight the significance of exchange rate stability in maintaining price control and affirm the effectiveness of liberalisation in strengthening Tanzania’s monetary transmission mechanism.

Abstract This study examines the impact of financial inclusion on key socio-economic outcomes, namely economic growth, financial stability, and income inequality, during the pre-COVID era. We develop a composite Financial Inclusion Index (FII) using a multidimensional framework encompassing indicators of availability, usage, and penetration dimensions. The analysis covers 60 developing countries from 2005 to 2019 and employs the two-step System Generalised Method of Moments (GMM) to address potential endogeneity and dynamic panel bias. The results reveal that financial inclusion significantly promotes economic growth, particularly by improving access to banking. However, it shows no statistically significant relationship with financial stability. In contrast, higher financial inclusion appears to widen income inequality, likely due to unequal access to financial services and uneven distribution of benefits. By applying a unified FII across three macroeconomic outcomes using a consistent sample and methodology, this study provides comprehensive insights into the multifaceted effects of financial inclusion in developing economies. The findings underscore the need for policies that enhance access to finance, strengthen financial literacy, and promote responsible lending to ensure that financial inclusion contributes to inclusive and stable economic development.

Purpose — Agricultural takāful has been introduced as a Sharīʿah-compliant risk-sharing mechanism to support smallholder farmers in managing production and climate-related risks. This study explores the potential of integrating Islamic social finance (ISF) instruments into an agricultural takāful model to enhance agricultural resilience and agrifood system security among paddy farmers in Malaysia. Design/Methodology/Approach — A mixed-methods approach was employed, combining a structured survey of 385 paddy farmers from three major granary states in Malaysia, notably Kedah, Kelantan, and Selangor, with in-depth interviews involving takāful operators, agricultural agencies, and Islamic finance institutions (IFIs). The survey captured farmers’ demographic profiles, willingness to participate and contribute to agricultural takāful, and their exposure to ISF instruments, while qualitative interviews provided complementary insights into challenges and opportunities for integrating takāful with ISF. Findings — The findings indicate that the paddy farmers have the intention to participate and contribute to agricultural takāful that predominantly influenced their attitudes and perceived behavioural control. However, affordability, awareness, and Sharīʿah compliance issues remain barriers for their participation. Financial support through zakat and waqf has the potential to enhance acceptance, while pricing remains a critical determinant for uptake. Qualitative evidence further highlights the need for a model that extends beyond risk protection to reflect ethical, inclusive, and sustainability principles. Originality/Value — This study contributes novel insights through the proposed Takāful Taʿāwuni Agro framework, which integrates takāful with zakat and waqf under a unified model of taʿāwun (mutual cooperation). Taʿāwun is positioned here as a broader guiding value for ISF, enabling collective responsibility, inclusivity, and community resilience. Research Limitations/Implications — This study is limited by its cross-sectional design and focus on selected granary regions in Malaysia. Future research should apply long-term and pilot-based approaches to empirically test the operationalisation and performance of integrated takāful–ISF models across different agricultural and country contexts. Practical Implications — The proposed Takāful Taʿāwuni Agro framework brings the spirit of taʿāwun into practice by aligning agricultural takāful with the Value-Based Intermediation Takaful (VBIT) agenda to provide a Sharīʿah-compliant and inclusive risk-sharing solution for vulnerable farmers. The model demonstrates how taʿāwun and VBIT can be applied beyond agriculture to strengthen financial resilience and social protection across other vulnerable sectors of the economy.

Purpose This paper aims to investigate whether Microtakaful has the potential to alleviate the financial situation of Malaysian B40 women entrepreneurs, who face significant financial constraints and vulnerability due to limited resources and a lack of risk management knowledge. Design/methodology/approach This qualitative study uses semi-structured interviews with B40 women entrepreneurs to explore their experiences. The data is analyzed using NVivo software to identify and visualize themes emerging from the interviews. Findings The study identifies Microtakaful as an essential instrument for mitigating the financial challenges faced by B40 women entrepreneurs. It also highlights the need for segment-specific Microtakaful products with features tailored to their unique requirements. Research limitations/implications The findings contribute to the literature on financial inclusion by providing evidence on how Microtakaful can empower economically disadvantaged women entrepreneurs and foster a more inclusive financial system. Practical implications The results offer actionable insights for financial institutions and policymakers to design innovative Microtakaful products that cater to the specific needs of B40 women entrepreneurs. This can support their economic resilience and enhance their contribution to the Malaysian economy. Originality/value This study provides new insights into the role of Microtakaful in addressing the financial constraints of B40 women entrepreneurs and emphasizes the importance of product customization to enhance its impact.

Hibah aset yang dicagarkan merupakan salah satu produk pengurusan harta Islam yang bertujuan untuk memindahkan pemilikan aset yang dijadikan cagaran kepada bank atau pemegang cagaran kepada pihak lain bagi tujuan tertentu. Walaupun produk ini telah lama berada di pasaran, isu-isu syariah dan hukum Islam yang terkait dengan produk ini masih menjadi perdebatan para pengkaji. Melihat kurangnya penelitian tentang masalah ini dari perspektif Syariah dan juga dari sudut pandang bank-bank Islam sebagai pemegang cagaran maka penulisan ini cuba mengupas isu ini. Kajian ini merupakan kajian kepustakaan (library research) iaitu, konsep dan produk berkaitan hibah aset bercagar dianalisis berdasarkan prinsip-prinsip Syariah serta pendapat para ulama klasik dan kontemporari. Analisis ini dilakukan bagi mendapatkan pandangan yang jelas dan diterima berhubung kedudukan produk ini dari perspektif Syariah. Hasil kajian mendapati bahawa konsep hibah aset yang dicagarkan memerlukan penelitian lebih lanjut dari perspektif Syariah. Antara isu utama yang dikenal pasti ialah unsur ketidakpastian/gharar dalam penentuan keabsahan kontrak hibah meskipun dilindungi oleh produk takaful seperti Morgage Reducing Term Takaful (MRTT) atau Mortgage Level Term Takaful (MLTT). Kajian turut mendapati bahawa produk ini tidak konsisten dengan beberapa keputusan polisi dokumen Syariah yang dikeluarkan oleh pihak Bank Negara Malaysia mengenai syarat dan rukun kontrak hibah serta juga kontrak cagaran/rahn. Selain itu, ketiadaan izin secara jelas dari pemberi hutang/creditor untuk membenarkan hibah, serta isu keperluan qabd yang tidak dapat dipenuhi dalam akad hibah lantas menyebabkan status aset yang dihibahkan dalam produk berkaitan boleh dipertikaikan.

This study aims to analyze and compare the zakat management and regulatory systems in Malaysia, Turkey, and Indonesia by examining the legal, administrative, and technological frameworks of each model and identifying the challenges and opportunities for improving zakat fund distribution efficiency. The study employs a descriptive-analytical and comparative approach, collecting data from secondary sources, including academic literature, government reports, and zakat-related regulations in each country. The findings reveal that Malaysia adopts a centralized system supported by digital technology, enhancing transparency and efficiency. In contrast, Turkey follows a decentralized model based on non-governmental organizations, but it lacks a unified regulatory framework. Meanwhile, Indonesia employs a hybrid model, combining government supervision with non-governmental participation, providing greater flexibility but facing challenges in coordination and oversight. Based on these findings, the study recommends enhancing cooperation between government and non-governmental institutions, increasing the use of technology in zakat fund management, standardizing legal frameworks, raising public awareness, and developing an integrated monitoring system to ensure fairer and more efficient distribution. Implementing these recommendations can contribute to strengthening the role of zakat in economic and social development, making it a more effective tool for poverty alleviation and achieving social justice in Islamic countries.

Purpose This study aims to examine the role of nongovernmental organization (NGO) partnerships in enhancing absorptive capacity, innovation and performance among Muslim entrepreneurs in small businesses. It offers a novel perspective by focusing specifically on Muslim entrepreneurs and the unique dynamics of NGO−small business partnerships within the context of Muslim societies. Design/methodology/approach This study analyzed data from 218 Muslim entrepreneurs in the small business sector using structural equation modeling-partial least squares (SEM-PLS). The SEM-PLS process included the measurement model, structural model and PLS-Predict. Findings The empirical findings indicate that partnerships with NGOs have a positive impact on both potential absorptive capacity and realized absorptive capacity. These mechanisms serve as key drivers of innovation capability among Muslim entrepreneurs in the small business sector. Furthermore, innovation capability has been found to have the most significant influence on overall entrepreneurial performance. Originality/value This study provides a novel contribution by examining the role of NGO partnerships in enhancing absorptive capacity, innovation and entrepreneurial performance among Muslim small business owners, an underexplored area. Anchored in the institutional-based view, this study highlights how external institutional forces, particularly NGOs, serve as enabling mechanisms that shape entrepreneurial behavior and strategic capacity-building in response to institutional environments. By embedding IBV, this research sheds light on how institutional supports influence knowledge-related processes and innovation dynamics within the context of Islamic entrepreneurship.

Purpose – As a member of the UN, Indonesia has a crucial role in ensuring the success of The SDGs. However, relying solely on government funding for the project is considered unfeasible. Islamic Social Finance (ISF) or ZISWAF has been presented as the alternative funding for SDGs projects. Recent legal developments in Indonesia, notably Presidential Regulation 112 of 2022, underscore a commitment to this integration by establishing a formal framework for merging ISF with SDGs. This study investigates how ISF in Indonesia can contribute to achieving the global goals. Methodology – Utilizing qualitative methods, including interviews with key stakeholders in both ISF and SDGs. Findings – The study finds that effective collaboration between ISF and SDG stakeholders is crucial, extending beyond mere SDG project funding. It recommends formalizing this collaboration through legal frameworks, such as ministerial regulations, which should clearly define the roles and responsibilities of the organizations involved. This approach aims to ensure a systematic and accountable process. Implication – The study outlines how the gap funding for SDGs projects can be decreased by utilizing ISF as one of the funding mechanisms. However, the obtained findings may not always equate to funds for the necessary SDG project. Thus, collaboration among SDG stakeholders and the ISF needs to be regulated. Originality – Previous study on SDGs and Islamic Social Finance focused mostly on their alignment. This study offers a new perspective on how stakeholders might collaborate. Keywords: Islamic Social Finance, SDGs, funding mechanism, Maqashid Shariah