The Influence of Productive Zakat on Poverty Alleviation in Indonesia

Abstract

This study investigates the empirical relationship between productive zakat and poverty alleviation in Indonesia using Autoregressive Distributed Lag (ARDL) approach over the period 1995-2023. The research employs comprehensive time series data from the National Zakat Board (BAZNAS) and Central Statistics Agency (BPS) to examine both short-run and long-run dynamics of zakat's poverty reduction effectiveness. Augmented Dickey-Fuller tests confirm stationarity of all variables at I(0) level, while Bounds Test reveals strong cointegration relationship with F-statistic of 6.965159, significantly exceeding critical values at all significance levels. The findings demonstrate that productive zakat exhibits significant poverty reduction effects with long-run coefficient of -0.454382 (p=0.0559) and stronger short-run impact through first lag coefficient of -0.607590 (p=0.0180). Error Correction Model validates the adjustment mechanism toward long-run equilibrium, indicating zakat's dual function as both sustainable redistributive instrument and short-term economic stabilizer. The model achieves exceptional explanatory power with R-squared of 98.97%, while CUSUM test confirms parameter stability across nearly three decades despite various economic shocks including the 1997-1998 Asian financial crisis. Results provide robust empirical evidence for integrating zakat into Indonesia's national poverty alleviation strategy, demonstrating its effectiveness as both counter-cyclical policy tool and structural poverty reduction mechanism. The study contributes significantly to Islamic fiscal policy literature by quantifying zakat's measurable economic impact through rigorous econometric methodology.