Enhancing Accountability in Malaysia's Wakalah Zakat Model: An Agency-Theoretic Evaluation of Islamic Financial Institution Fund Distribution Practices and State Islamic Religious Council Monitoring Mechanisms
DOI:
https://doi.org/10.24191/tbsh3692Keywords:
Zakat, Wakalah, Islamic Social FinanceAbstract
Wakalah (agency) model, under which State Islamic Religious Councils (SIRCs) delegate zakat distribution to Islamic Financial Institutions (IFIs) is designed to leverage IFIs' banking infrastructure, digital platforms, and outreach capacity to transition asnaf (beneficiary) assistance from consumptive relief toward productive, empowerment-oriented interventions such as micro-financing. This study examines the principal-agent relationship between SIRCs (al-muwakkil) and IFIs (al-wakil), arguing that the absence of residual claimants in the zakat ecosystem removes the market-discipline mechanisms that ordinarily constrain agency costs, thereby intensifying information asymmetry and monitoring burdens. Employing a qualitative multiple-case study design, the research triangulates regulatory documents, corporate and CSR disclosures, and semi-structured interviews with selected practitioners. The findings identify systemic "governance blind spots" in counterparty strategy, screening alignment, monitoring architecture, and reporting standards, and show that disbursement compliance is measured while poverty-graduation outcomes are not. The study proposes an Integrated Wakalah Governance Framework (IWGF) comprising sequenced within-institution, inter-institutional, and system-level reforms, and argues for Maqasid al-Shariah-based outcome measurement as the appropriate accountability standard for wakalah zakat governance.
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