Efficiency of zakat institutions in Indonesia: data envelopment analysis (DEA) vs free disposal hull (FDH) vs super-efficiency DEA

Muhamad Nafik Hadi Ryandono, Tika Widiastuti*, Eko Fajar Cahyono, Dian Filianti, A. Syifaul Qulub, Muhammad Ubaidillah Al Mustofa

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

2 Citations (Scopus)

Abstract

Purpose: Zakat is an important Islamic economic instrument that plays significant role in Sustainable Development Goals. Accordingly, Zakat Institutions must manage zakat in a proper and efficient manner. This study aims to examine the efficiency of Zakat Institutions based on their clusters which are government, business and social organizations. Design/methodology/approach: This study uses three quantitative methods: data envelopment analysis (DEA), free disposal hull and super-efficiency DEA. The analytical method is based on production approach, variable return to scale assumption and output orientation. The sample consists of 14 Zakat Institutions from three clusters: Zakat Institutions managed by government, Zakat Institutions managed by corporation and Zakat Institution managed by social organizations. Findings: The results revealed that all of three techniques culminate the same ranking order of efficiency. Zakat Institution managed by the government is the most efficient Zakat Institution, with the average value of 0.87 by using three approaches combined. Meanwhile, Zakat Institutions owned by company and social institutions cluster are in second and third position, with the average value of 0.65 and 0.4, respectively, based on the results of the three approaches. This study contends that the level of efficiency of Zakat Institutions may be supported by clusters (affiliations) in their management. Research limitations/implications: This study’s limitation is the inadequacy of the required data. Nonetheless, this study provides insights to improve the efficiency of Zakat Institutions based on their clusters. Zakat Institutions in each cluster can improve their efficiency by optimizing inputs to produce multiple outputs. Originality/value: This study enhances research on the efficiency of Zakat Institutions using three methods to assess the consistency and strength of Zakat Institutions’ efficiency values. In addition, this study examines the efficiency level of Zakat Institutions based on their clusters.

Original languageEnglish
Pages (from-to)1344-1363
Number of pages20
JournalJournal of Islamic Accounting and Business Research
Volume14
Issue number8
DOIs
Publication statusPublished - 22 Nov 2023
Externally publishedYes

Keywords

  • DEA
  • Efficiency
  • FDH
  • Resource efficiency
  • Socioeconomic development
  • Super-efficiency DEA
  • Zakat institutions

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