Zakat Computation in Islamic Banking: Evidence from Bangladesh and Turkey

Abstract

Purpose –  This study addresses this gap by comparatively analyzing zakat computation practices in the Islamic banking sectors of Bangladesh and Turkey.

Design/Methodology/Approach – The study employs a qualitative comparative case study design. Data were collected through document analysis of regulatory frameworks, central bank guidelines, AAOIFI standards, institutional reports, and scholarly literature. Two leading Islamic financial institutions, Islami Bank Bangladesh Limited (IBBL) and Kuveyt Türk Katılım Bankası, were selected as representative case studies. The collected data were analyzed using comparative institutional analysis to identify similarities, differences, and governance patterns in zakat computation and administration.

Findings – The findings reveal significant institutional differences between the two countries. Bangladesh has partially integrated zakat into Islamic banking operations through institutional practices and dedicated zakat initiatives, although regulatory harmonization remains insufficient. In contrast, Turkey provides centralized religious guidance through the Diyanet system but lacks formal institutional integration of zakat within participation banking. The study further identifies common challenges in both jurisdictions, including the absence of standardized zakat accounting procedures, inconsistencies in asset valuation methods, limited regulatory coordination, and governance-related constraints.

Originality/Value – This study contributes to the growing literature on Islamic finance by providing one of the few comparative examinations of zakat computation practices between Bangladesh and Turkey. By integrating perspectives from Islamic accounting, regulatory governance, and institutional economics, the research offers new insights into how different governance structures shape zakat implementation within Islamic financial institutions. 

Research Limitations/Implications – The study is limited to two case institutions and relies primarily on qualitative document-based analysis, which may restrict the generalizability of the findings. The findings suggest the need for further scholarly investigation into cross-country harmonization of zakat governance frameworks.

Practical Implications – The findings provide valuable insights for policymakers, Islamic banking regulators, Shariah supervisory bodies, and financial practitioners. The study recommends greater alignment with AAOIFI standards, the development of digital zakat management platforms, enhanced regulatory oversight, and stronger coordination among financial institutions, religious authorities, and government agencies.