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PurposeZakat has a strong humanitarian and social-political value. Zakat occupies a central role in Islamic fiscal policy and operations. At the same time, it does not preclude the use of modern tools and techniques in raising the state revenues. Islam provides its own comprehensive approach how the state can raise its revenue and how the revenue should be spend. Zakat is collected from those who are qualified and distributed to the eight recipients as identified in the Quran. Waqf instrument plays an important role in Muslim societies as its support the aged, the poor, the orphans through provision of education, training and business activities. The creation of waqf is strongly advocated, especially the creation of cash waqf in view of the expensiveness of land as waqf. There are collaboration efforts for cash waqf and zakat collection being done through Islamic banks and takaful. The paper aims to discuss these issues.Design/methodology/approachThe data were source from the inland revenue, government agencies and state religious authorities, interviews, articles and conference reviews, as well as economic reports and later transcribe into charts and figures.FindingsIts shows the efficiency of wealth distribution according to the Islamic principles and application of the financial inclusion in the Islamic society.Research limitations/implicationsThe limitation is in verifying the accuracy of data gathering from the government agencies.Social implicationsThe study can be used in financial inclusion through the application of zakah and waqf being applied to alleviate poverty.Originality/valueThe research is an extended work done on zakah and waqf in Islamic wealth distribution.

Purpose – The purpose of this paper is to examine the banking industry’s efficiency using the case of Yemen. Design/methodology/approach – The paper utilises two-stage analysis to evaluate the efficiency adopting Data Envelopment Window Analysis (DEWA) in the first stage for the period 1996-2011. Furthermore, the paper addresses, in two-dimensional matrix, the stability and efficiency of the banking sector in order to assess their ability for survival. In the second stage, panel data analysis is applied to regress a set of bank-specific and macro-economic variables on the efficiency of the banking sector in Yemen in a comparative fashion between Islamic and conventional banks. Findings – The findings of the investigation indicate that the Yemeni banking industry in general was on a declining efficiency’s trend with increased instability during the later period of the investigation. In addition, the study shows that most conventional banks were relatively stable, though inefficient, while Islamic banks were more efficient over the time. The results of panel data regression further suggest that efficiency is related to a number of determinants. Loan/financing, and profitability are the common key determinants of efficiency for both Islamic and conventional banks. However, other determinants have impacted differently for Islamic and conventional banks, which could reflect the uniqueness of their operation and structure. Research limitations/implications – The present study provides a basis for the regulators and bankers to assess the viability of the banking sector and proposes policies to restructure the industry in order to enhance the performance of the whole industry. Originality/value – The paper presents new empirical findings on the efficiency of Islamic and conventional banks in Yemen.

Purpose The purpose of this paper is to examine the determinants of bank margins in the Yemeni banking sector for Islamic and conventional banks. The first objective is to investigate whether there is a significant difference between the margins of conventional and Islamic banks. The second objective is to examine whether efficiency represents an influential factor in determining bank margins for Islamic and conventional banks controlling for other micro and macro variables. Design/methodology/approach Using a data set of banks in Yemen for the post-liberalisation period from 1996 to 2011, the study utilises panel data with unbalanced observations for 16 banks, of which four are Islamic banks and the remainder conventional banks. Parametric and non-parametric techniques are complemented by dummy variable regression using random effects. Panel fixed effects regression was also undertaken as a robustness check. Findings The paper finds that the overall bank margin in Yemen has steadily decreased during the observation period with the exception of the year 2011. The parametric and non-parametric results show that the bank margins are significantly higher for conventional banks than for Islamic banks. The results provide evidence that bank margins are related to neither types of efficiency, but are affected by capitalisation, size, the opportunity cost of the reserve and liquidity, although the impact is shaped differently for Islamic and conventional banks. Practical implications The paper provides a basis for regulators and bankers for assessing the viability of the banking sector and proposes policies to restructure the industry to enhance its performance. Originality/value This paper adds value to the literature for the Yemeni banking sector and extends the previous research on the determinants of bank margins by focusing on the impact of efficiency on bank margins. Also, it compares the Islamic banks with different types of conventional banks in Yemen in their margins trend.

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