Determinants of zakat payers to trust zakat institutions with the mediating effect of blockchain technology : a case study of Baznas North Sumatera

Abstract

Despite having the biggest Muslim population in the world, the amount of Zakat funds collected by Zakat institutions has been far from its expectation. Zakat, one of the Islamic philanthropic tools, has the potential to eradicate poverty. Effective handling of Zakat is essential for the country. Even though paying Zakat is mandatory for every Muslim, not all Zakat payers who pay it do so through Zakat institutions. One of the reasons for this is the lack of trust that Zakat payers have in Zakat institutions. However, blockchain technology, known for its transparency and immutability, can be leveraged to boost trust in Zakat institutions. This research aims to investigate the issues and challenges faced by BAZNAS (Badan Amil Zakat Nasional) in North Sumatera in collecting and distributing Zakat, as well as identify the determinants of Zakat payers’ attitudes towards trust in Zakat institutions. The study also seeks to explore the impact of these determinants on trust in BAZNAS, North Sumatera, and the potential mediating effect of blockchain technology in this relationship. Both quantitative and qualitative methods were used to gather the data. Qualitative data were collected through semi-structured interviews with the top management of BAZNAS in North Sumatera, while quantitative data were collected from 301 Zakat payers using a cross-sectional design and questionnaire method. The collected data were analysed by Structural Equation Modeling (SEM) techniques using AMOS 24 and SPSS 26. The results of the survey showed that the collection of Zakat in BAZNAS, North Sumatera, is negatively affected by misunderstandings about the Zakat concept, conflicting opinions of religious leaders, and inadequate efforts to educate people about Zakat. Challenges in Zakat distribution include the lack of comprehensive information about Zakat recipients and difficulties in verifying their eligibility. The use of blockchain technology could improve the collection and distribution of Zakat, but it requires appropriate infrastructure and well-trained personnel. From the quantitative data of this study, the determinants of Zakat payers' attitudes towards enhancing trust are reputation, satisfaction of Zakat distribution, service quality, and disclosure practices. These determinants were found to have a statistically significant positive impact on trust in Zakat institutions. Furthermore, this study found that blockchain technology has a partial mediation effect on the relationship between attitude determinants and trust in Zakat institutions. Therefore, blockchain technology has the potential to improve trust in the institution by providing a more transparent and secure system for managing Zakat. This study contributes both theoretically and empirically to the use of blockchain technology to enhance trust in Zakat institutions. The study provides insightful recommendations and suggestions for Zakat institution managers and policymakers in Indonesia. Additionally, the study proposes areas for further research, presenting opportunities for expanding knowledge and understanding in this field.