Zakat and Socio-Economic Impact: The Role of Local Government and Zakat Institutions

Abstract: This study aims to solve research questions on whether support for zakat institutions (ZIs) from regional governments in the East Java province of Indonesia affects the social and economic conditions of the region. The authors observed 11 samples of cities and districts in East Java over the last three years (2019 to 2021). Thirty-three research data were processed using panel data regression techniques with a fixed-effects model approach. Data was obtained from the National Zakat Institution (Baznas). The results show that financial support from the local government budget (RREB) and through zakat regulations of the regional governments in East Java have a positive effect on GRDP and a significant negative effect on the Gini index. In addition, zakat distribution activities in East Java have also been shown to have a significant positive and negative effect on GRDP growth and the Gini index. This study also provides recommendations to the local government of East Java and zakat stakeholders in synergising to build a better regional ZI system to support the regional economy.