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

Masudul Alam Choudhury (Department of Economics and Finance, Sultan Qaboos University, Muscat, Oman)
Sofyan Syafri Harahap (Department of Economics and Finance, Trisakti University, Jakarta, Indonesia)

Managerial Finance

ISSN: 0307-4358

Article publication date: 1 August 2008




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.


Mathematical modeling along with explanation.


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.


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.



Alam Choudhury, M. and Syafri Harahap, S. (2008), "Interrelationship between Zakat, Islamic bank and the economy: A theoretical exploration", Managerial Finance, Vol. 34 No. 9, pp. 610-617.



Emerald Group Publishing Limited

Copyright © 2008, Emerald Group Publishing Limited

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