Efficiency and Stability of Zakat Institutions in Malaysia and Indonesia: DEA Window Analysis

Abstract

The purpose of this study is to measure the efficiency and stability of zakat institutions in Indonesia and Malaysia. There are 14 zakat institutions that will be analyzed using data envelopment analysis (DEA) window analysis during the period of 2016 to 2020. The result shows that the average efficiency of zakat institution is 78% during the observation period. The inefficiency of zakat institutions from both countries is caused by the less-than-optimal distribution of zakat funds. The best performing zakat institutions are Selangor, BSMU, BRI Foundation, and Baznas because they have the highest efficiency and stability. This study has filled the gap in previous studies that measure the efficiency of zakat institutions with the standard DEA approach. Zakat institution managers can identify potential improvements in input and output variables to achieve maximum level of efficiency.