Financial Compliance and Ethics: Factors Affecting Zakat Payment Among Business Owners in Algeria

Research Sheds Light on Crucial Factors Influencing Zakat Compliance

A recent study conducted by Mouad Sadallah and Hijattulah Abdul- Jabbar of the Tunku Puteri Intan Safinaz School of Accountancy, Universiti Utara Malaysia, has explored the factors affecting zakat compliance among Algerian business owners. The research aimed to investigate how political instability, trust, and knowledge impact zakat compliance from an ethical perspective.

Methodology

The study employed a cross-sectional design and self-administered questionnaires to survey 575 business owners in Algeria. This methodology allowed researchers to gather valuable insights into the factors influencing zakat compliance among entrepreneurs in the region.

Key Findings

The results of the study revealed that:

• Political instability has a significant influence on zakat compliance among Algerian business owners.
• Zakat knowledge also plays a crucial role in determining whether entrepreneurs pay their dues to the zakat authority.
• Trust is another factor that significantly impacts zakat compliance, with business owners who have more trust in the zakat authority being more likely to comply.

These findings support the notion that an ethical approach can explain zakat compliance behavior. The research highlights the importance of considering these factors when developing policies and strategies aimed at promoting financial compliance and ethics in Algeria.

Implications for Zakat Institutions

The study’s findings offer valuable lessons for zakat institutions in Muslim societies, enabling them to:

• Formulate effective collection policies
• Assess societal trust in the zakat authority
• Evaluate the impact of political instability on entrepreneurs’ zakat compliance

Additionally, the research emphasizes the need to strengthen entrepreneurs’ zakat knowledge regarding the necessity of paying zakat to the authority.

Contributions to the Existing Literature

This research breaks new ground by exploring the effects of these factors on zakat payers’ compliance ethical decisions in developing countries like Algeria. The study contributes to the existing literature on the ethical theory by investigating the impact of political instability on zakat compliance among Algerian business owners.

Policy Implications

The study’s findings have significant implications for policymakers and regulatory bodies seeking to promote financial compliance and ethics in Algeria. By understanding the complex interplay between these factors, they can develop targeted strategies to enhance zakat compliance and foster a more ethical financial environment.

Overall, this research provides valuable insights into the factors influencing zakat compliance among Algerian business owners, highlighting the importance of considering political instability, trust, and knowledge when developing policies aimed at promoting financial compliance and ethics.