nep-isf New Economics Papers
on Islamic Finance
Issue of 2023‒09‒18
two papers chosen by
Ali Polat, Ankara Yıldırım Beyazıt Üniversitesi

  1. Societal trust and Sukuk activity By Saqib Aziz; Dawood Ashraf; Rwan El-Khatib
  2. Between God, the People, and the State: Citizen Conceptions of Zakat By Gallien, Max; Javed, Umair; van den Boogaard, Vanessa

  1. By: Saqib Aziz (ESC [Rennes] - ESC Rennes School of Business); Dawood Ashraf; Rwan El-Khatib (Zayed University)
    Abstract: Sukuk investments require investors and issuers to adhere to subtle moral and ethical standards beyond following mere profit maximization objectives. Investor trust manifested through the level of societal trust could be vital in the global Sukuk investment surge. This study investigates the relationship between the societal trust level and Sukuk activity. It employs a global sample of Sukuk issuances spanning over 2001–2019 and finds that a country's societal trust level significantly and positively influences the amount of Sukuk issued. Moreover, this positive effect supersedes the negative effects of higher information asymmetry associated with equity-based Sukuk or Sukuk issued by risky firms. Ultimately, trust is both a deterrent and critical for Islamic finance success.
    Keywords: Trust, Sukuk, Islamic finance, Information asymmetry, Culture
    Date: 2021–09
  2. By: Gallien, Max; Javed, Umair; van den Boogaard, Vanessa
    Abstract: Zakat – one of the five pillars of Islam – is an annual obligatory payment, typically equivalent to 2.5 per cent of an individual’s productive wealth, to a set of appropriate recipients, including the poor. The annual global zakat pool is estimated to make up between US$200 billion and 1 trillion. States have long sought to harness zakat for their own budgets – and legitimacy. To date, however, there has been no systematic empirical discussion of how citizens perceive and engage with state involvement in zakat and how they perceive state-run zakat funds. These perceptions and experiences are central to important questions of how we conceptualise fiscal transfers and the relationship between citizens and states: if zakat is legally treated as a tax, does it function like one too? Do citizens engage with it differently? Does its formalisation strengthen or undermine the social norms in which it is embedded? Summary of Working Paper 167.
    Keywords: Finance, Politics and Power,
    Date: 2023

This nep-isf issue is ©2023 by Ali Polat. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.