Abstract
As digital financial services rapidly expand globally, Islamic social finance platforms are increasingly adopting digital technologies to facilitate Zakat collection. However, driving compliance and maximizing contribution amounts on these digital platforms remains a significant challenge. This study presents the results of a randomized controlled trial (RCT) conducted in Pakistan to evaluate the efficacy of behavioral nudges in encouraging Zakat compliance and increasing donation amounts via a mobile fintech application. Utilizing a sample of 1,200 registered Muslim users, participants were randomly assigned to a control group or one of three treatment groups receiving distinct push-notification nudges: a religious obligation nudge, a social utility (impact) nudge, or a peer comparison nudge. Our empirical findings indicate that behavioral nudges significantly enhance Zakat compliance compared to standard reminders. Specifically, the religious obligation nudge yielded the highest conversion rate, increasing compliance by 13.1 percentage points over the control. Conversely, the social utility nudge proved most effective in driving larger donation amounts, generating an average increase of 66.7% in the size of the Zakat paid. Interestingly, the peer comparison nudge showed a marginal effect, suggesting that traditional social proof mechanisms may be mitigated by Islamic values regarding anonymous giving. These results offer crucial insights for Islamic fintech developers, charity organizations, and policymakers seeking to leverage behavioral economics to optimize faith-based social finance mobilization.
