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Interrelationship between Zakat, Islamic bank and the economy A theoretical exploration

Interrelationship between Zakat, Islamic bank and the economy A theoretical exploration Purpose – The purpose of this paper is to formalize a general equilibrium circular causation relationship model in the Islamic economic framework between wealth tax (Zakat), Islamic bank and the real economy. Design/methodology/approach – Mathematical modeling along with explanation. Findings – The integrative interrelationships can be formalized only under the assumption of unity of knowledge as derived from the foundation of oneness of the divine law (shari’ah) according to the Qur’an, Prophetic traditions (Sunnah) and social discourse. Research limitations/implications – A future work would be to empirically estimate the general equilibrium model. Practical implications – A guidance to Islamic banks on the constructive utilization of Zakat fund for productive transformation in the real economy. Originality/value – A general equilibrium model guided by the episteme of oneness of the divine law at work, hence unity of knowledge at work in real problems of ethics and economics according to the Islamic worldview. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Managerial Finance Emerald Publishing

Interrelationship between Zakat, Islamic bank and the economy A theoretical exploration

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References (7)

Publisher
Emerald Publishing
Copyright
Copyright © 2008 Emerald Group Publishing Limited. All rights reserved.
ISSN
0307-4358
DOI
10.1108/03074350810890967
Publisher site
See Article on Publisher Site

Abstract

Purpose – The purpose of this paper is to formalize a general equilibrium circular causation relationship model in the Islamic economic framework between wealth tax (Zakat), Islamic bank and the real economy. Design/methodology/approach – Mathematical modeling along with explanation. Findings – The integrative interrelationships can be formalized only under the assumption of unity of knowledge as derived from the foundation of oneness of the divine law (shari’ah) according to the Qur’an, Prophetic traditions (Sunnah) and social discourse. Research limitations/implications – A future work would be to empirically estimate the general equilibrium model. Practical implications – A guidance to Islamic banks on the constructive utilization of Zakat fund for productive transformation in the real economy. Originality/value – A general equilibrium model guided by the episteme of oneness of the divine law at work, hence unity of knowledge at work in real problems of ethics and economics according to the Islamic worldview.

Journal

Managerial FinanceEmerald Publishing

Published: Aug 1, 2008

Keywords: Banks; Islam; Epistemology; Economic theory; Equilibrium methods; Modeling

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