A socio-economic model of Zakah compliance

PurposeTo provide a sound understanding of Zakah compliance behaviour, this paper aims to shed light on the relationships between Zakah system fairness, Zakah morale, peer influence and law enforcement with Zakah compliance behaviour among entrepreneurs.Design/methodology/approachThe underpinning model used in this paper is the socio-economic theory of regulatory compliance for assessing the probable determinants shaping Zakah payers' compliance behaviour. Based on a survey of active entrepreneurs in a typical Islamic situation like Yemen, a total of 500 self-administered instruments were distributed to the respondents. Partial least squares-structural equation modelling (PLS-SEM) was used to estimate the compliance model.FindingsAll the variables included in the compliance model are statistically significant, except for law enforcement. Zakah compliance of entrepreneurs is significantly influenced by Zakah system fairness, Zakah morale and peer influence.Practical implicationsZakah institutions and agencies in Muslim-majority countries may use the results of this work to focus attention on appropriate proactive policies to formulate a fair Zakah system, inculcating moral responsibility among Zakah payers, embarking on sensitisation programmes in society as a whole, and being more proactive in educating Muslims in the importance of paying Zakah to the respective Zakah agencies.Originality/valueThis paper complements the limited literature on Zakah by examining both tangible and intangible motivations affecting Zakah payers' compliance decision.