BAYT AL-MAL AND ITS ROLE IN ECONOMIC DEVELOPMENT: A CONTEMPORARY STUDY

Abstract

Bayt al-Mal, known as the public treasury of Islamic state, was established by the Prophet-may peace be upon Him- and then it was further extended and expanded by Abu Bakr and Umar, who succeeded the Prophet as the Caliph of the Islamic state. It is the state treasury that keeps the sole authority to mobilize the funds of the state. This paper aims to study the potential role and contribution of Bayt al-Mal to economic development in the contemporary context. It will be a qualitative paper and the analytical and descriptive method will be applied. Historically Bayt al-Mal played a great role in the distribution and redistribution of funds. It performed the function that is similar to the function of the ministry of finance at present. It also carried out the jobs of central bank in terms of monitoring, issuing currencies, controlling credits and so forth. Through discussing its sources and expenditures the paper posits that the role of Bayt al-Mal can be revived and accelerated by, for example, providing small-medium funds, managing Zakah and awqaf, channeling the funds, issuing various financial instruments and so forth. Bayt al-Mal could have a significant role in the eradication of poverty from the state. The paper concludes that with the rapid growth of Islamic finance, the Bayt al-Mal can be utilized in parallel in order to have a robust economic development.