Vika Annisa Qurrata, Muhammad Hakimi Mohd. Shafiai, Hairunnizam Wahid, Suhaili Almaamun, Abdul Ghafar Ismail
This study examines institutional economics from an Islamic perspective with a particular focus on waqf as a property-based, rule-bound institution. Institutional economics encompasses two major approaches: Old Institutional Economics (OIE), which views institutions as ways of thought and action shaped by societal customs, and New Institutional Economics (NIE), which conceptualises them as ‘rules of the game’ governing human interaction. Integrating these perspectives with Sharīʿah principles, the research addresses a significant theoretical gap by explaining Islamic economic institutions within this dual framework. Using a qualitative approach with a comparative analysis of conventional and Islamic approaches, the study identifies the defining juridical traits of waqf, including perpetuity, irrevocability, and inalienability, as binding legal constraints as well as sociocultural norms that sustain justice, stewardship, and intergenerational equity. The findings indicate that Islamic institutional economics diverges from conventional systems, which are primarily motivated by efficiency. Instead, it embeds moral commitments within three principal economic functions: defining property rights, facilitating transactions, and sustaining cooperation. Guided by the waqf core principles, waqf institutions operationalise these functions through ethical governance, risk-sharing, and asset-based contractual structures that lower enforcement costs while enhancing social welfare. As instruments of multidimensional sustainability, waqf institutions integrate economic, social, and environmental objectives, positioning waqf as a model for equitable and resilient development. By linking institutional theory with Islamic jurisprudence, this study demonstrates that waqf exemplifies how Islamic economic institutions translate normative values into governance structures and practical outcomes. The results provide a theoretical foundation and policy insight for strengthening waqf as a vehicle for sustainable economic growth and societal well-being. B52, O10, O17, Q01 © The Author(s) 2025. This article is distributed under the terms of the Creative Commons Attribution-NonCommercial 4.0 License (https://creativecommons.org/licenses/by-nc/4.0/) which permits non-commercial use, reproduction and distribution of the work without further permission provided the original work is attributed as specified on the SAGE and Open Access pages (https://us.sagepub.com/en-us/nam/open-access-at-sage).
Universiti Kebangsaan Malaysia, Selangor, Bangi, Malaysia; Universitas Negeri Malang, East Java, Indonesia
