Simulating the cause and effect of providing microtakaful protection using zakat and waqf to the poor

• Published in: AIP Conference Proceedings
• Main Author: Mohamad A.I.; Zulkepli J.; Abidin N.Z.
• Format: Conference paper
• Language: English
• Published: American Institute of Physics Inc. 2023
• Online Access: https://www.scopus.com/inward/record.uri?eid=2-s2.0-85179788920&doi=10.1063%2f5.0177168&partnerID=40&md5=fd1839f50284ab5a5117d6450dc6bf80
• ISSN: 0094243X
• DOI: 10.1063/5.0177168

Islam recognize the problems of poverty and has several instruments to tackle the problem of poverty such as zakat and waqf. Both instruments capable of providing financial protection to the poor as known as microtakaful. Complexity and uncertainty cash flows of microtakaful need to be studied in order to provide the protection in the long term. System Dynamics Modelling (SDM) capable of providing simulation results that shows the impact of changes in the key variables of the microtakaful. The main aim of the paper is to find minimum contribution required which is affordable to the poor but also sustainable for the microtakaful provider in the long run. Analysis from the model shows that the minimum contribution of RM160 per year is required to sustain all the funds involved. The simulation results can benefit the decision makers such as zakat and waqf institutions in providing microtakaful protection to the poor in the long run. Further analysis of other key variables and other combining with other approach in determining the contribution should be done in order to get more insight of the model. © 2023 Author(s).