Zakat and Economics Growth in the Peninsular Malaysia: An ARDL Bounds Testing Approach

Zakat is intended to stimulate economics development, education, social, human resources empowerment, religion health and insurane programes. The seven programes above is implemented by Malaysian government to improve economics growth. The aim of the study is to examine the impact zakat on economics growth in Malaysia using the Autoregressive Distributed Lag (ARDL) bound testing approach. The analysis was carried out for the period from 1980–2009. The findings of the research reveals that zakat has a positive and significant influence on GRDP in the short-and long-run. The Granger causality test indicates that there exist causal relationship between zakat and economic growth in Selangor, Pulau Pinang, Negeri Sembilan and Terengganu. Then, zakat was significance influence economic growth in the Johor, Kedah, Kelantan, Melaka and Perak. But, in the Pahang and Perlis, economics growth was significance influence on zakat. Zakat in Malaysia can be used as one of the decide fiscal policy in the states of Malaysia to stimulate economic growth.