What determines the scale of state ownership in enterprises? Some evidence from post-socialist countries

Abstract State-owned enterprises still play an important role in many countries around the world. The aim of this research is to indicate which factors had a significant impact on the scale of state ownership in enterprises in the group of twenty eight post-socialist countries. The large scale privatisation indicator from the EBRD and the novel microlevel-based SOE measure were regressed on sets of cultural, political, economic and control variables. The results show that cultural factors—represented by the dominant religion—had a substantial impact on the scale of state ownership in enterprises while the role of political and economic factors was less pronounced. These results emphasise the importance of cultural factors in shaping the scale of state ownership in enterprises. This study contributes to the literature by analysing factors influencing the scale of state ownership in enterprises in contemporary economic conditions which has been missing until now.

Introduction
A discussion on the role of the state as an owner of enterprises has been an important part of contemporary economic literature. The importance of this topic is driven by the fact that the scale of state ownership in enterprises is substantial in many countries around the world. Christiansen and Kim (2014) showed that 282 out of the 2,000 largest publicly listed companies worldwide were state-owned in 2012-2013. Szarzec, Dombi and Matuszak 96 Economics and Business Review, Vol. 6 (20), No. 4, 2020 (2019) indicated that state-owned enterprises (SOEs) accounted for more than 20% in terms of total assets in the group of very large enterprises over the period 2007-2016 in nineteen out of thirty European countries and that state-owned enterprises played an important role not only in post-socialist countries but also in the 'old-EU' states such as Greece, Italy, Austria and France as well as in Norway.
The topic of state ownership in enterprises is analysed in the literature mainly at the microeconomic level and studies focus largely on the comparison of financial performance between SOEs and privately owned enterprises, causes of the SOE underperformance and the impact of privatisation at firmlevel. Despite the importance of state involvement in the economy through enterprises there is still a lack of research analysing the factors influencing the scale of the SOE sector. This study contributes to the literature by analysing the determinants of state ownership in enterprises in contemporary economic conditions.
The focus in this study is on post-socialist countries of Central-Eastern Europe and the former Soviet Union. Nearly thirty years ago this set of states started a process of rapid institutional changes as a group of quite homogenous countries from the perspective of their political and economic systems (Piątek, Pilc, & Szarzec, 2019). The radical transformation involved the transition from authoritarian to democratic systems and from centrally planned to market economies (Ratajczak, 2009). At the beginning of the transition state ownership dominated in the group of large enterprises in the region and privatisation was perceived as a means to increase the efficiency of divested enterprises, to reduce government interference in the economy, to enhance competition and as a source of budget revenues (Megginson & Netter, 2001;Mihályi, 2017). It was also expected that the role of state ownership would gradually decline over time and that most economies in the region would become very much alike (Bałtowski & Mickiewicz, 2000). However the scale of state ownership in companies differs substantially among post-socialist countries nowadays and SOEs still remain important in many countries in Central-Eastern Europe and the former Soviet Union (see Figure 1 and Table A1 in Appendix). What is more privatisation processes have slowed down in recent years and the scale of state ownership in enterprises seems to be relatively stable from the mid-2000s (see Figure 2; Szarzec et al., 2019).
The aim of this research is to indicate which factors had a significant impact on the scale of state ownership in enterprises in the group of post-socialist countries. The data employed in the econometric analysis covers twenty eight post-socialist countries. State ownership in enterprises is represented in the econometric analysis by the large scale privatisation indicator by the European Bank for Reconstruction and Development (EBRD) for the years 2007-2014 and the share of SOEs in the group of large enterprises in terms of total assets from the novel dataset by Szarzec and others (2019) for the years 2007-2016. 3 This set of the data was chosen for the following reasons: first, state ownership in enterprises is concentrated in the group of large entities; second, the group of post-socialist countries started the transition with fairly homogenous economic systems and a large enterprise sector strongly dominated by SOEs 4 but the role of the state as an owner differs substantially in the region currently; third, the focus on recent years allows the analysis of the heterogeneity in terms of state ownership in enterprises as a result of deliberate choices of economic policies of states rather than as an effect of selected modes of privatisation and the speed of economic reforms. Cultural, political and economic factors are considered as independent variables in the econometric analysis. The results show that the scale of state ownership in enterprises is substantially affected by cultural factors represented by the dominant religion. The role of political and economic factors is less pronounced.
The paper is structured as follows. In Section 1 a brief literature review on the factors influencing institutional changes in post-socialist countries is presented. Section 2 introduces the dataset and Section 3 presents the research design. Section 4 contains the results. Results are discussed in Section 5. The last section concludes.

Literature review
The focus in this study is on addressing the question about the factors influencing the scale of state ownership in enterprises based on the experience of postsocialist countries. In order to facilitate the discussion on the cultural, political and economic factors as potentially impacting the share of SOEs in the economy this review builds on the broadly analysed literature on determinants of institutional performance (e.g. La Porta, Lopez-de-Silanes, Shleifer, & Vishny, 1999;De Melo, Denizer, Gelb, & Tenev, 2001;Di Tommaso, Raiser, & Weeks, 2007;Piątek, Szarzec, & Pilc, 2013;Alesina & Giuliano, 2015;Piątek et al., 2019). Guiso, Sapienza and Zingales (2006) described culture as 'those customary beliefs and values that ethnic, religious and social groups transmit fairly unchanged from generation to generation' . 5 In the opinion of Pejovich (2003), a process of the institutional transition of post-socialist countries was a cultural issue rather than a simple technical one. The formal institutions are strongly influenced by cultural factors and the pace of the transition depends on the in-3 2014 is the last year for which transition indicators from the EBRD are available and the SOE measures by Szarzec and others (2019) cover the period 2007-2016. 4 The large scale privatisation indicator was equal to 1 (little private ownership) in all of twenty eight post-socialist countries included in the analysis in 1989. 5 The literature on the culture-institutions nexus was surveyed by Alesina and Giuliano (2015). For a review of the literature on the deeply rooted determinants of economic development, see: Spolaore and Wacziarg (2013). teraction between prevailing informal rules and new formal rules-when both are not coordinated the transition costs of institutional restructuring are much higher (Pejovich, 2003). One of the most commonly used proxies of unobservable cultural factors is a dominant religion (e.g. Schweickert, Melnykovska, Belke, & Bordon, 2011;Piątek et al., 2019). The religion impacts the society's attitudes towards the role of the state in the economy, including expectations regarding the provision of certain goods through market incentives or directly by the state (Grigoriadis, 2016), and one can expect that SOEs would play a more substantial role in countries dominated by collectivist religions (Eastern Orthodox and Muslim populations) than by individualist religions (Protestant). Gorodnichenko and Roland (2011) analysed the culture-growth nexus with a number of cultural dimensions and concluded that individualism versus collectivism is the main dimension in shaping long-run growth differences across countries. The most commonly used measure for individualism was developed by Hofstede (2001) which distinguished also the dimensions such as power distance, masculinity, uncertainty avoidance, long-term orientation and indulgence. Based on Hofstede's typology and the dataset by Beugelsdijk, Maseland and van Hoorn, (2015), Tarabar (2017) showed for post-socialist countries that individualist and low power-distance cultures are associated with greater reform efforts.
Several decades of the centrally planned economy had a substantial effect on the individual and social behaviours of East-European and the former Soviet Union countries. As indicated by Ratajczak (2009) the societies of the countries undergoing transformation were characterised by a low level of social trust, a high level of corruption and egalitarian attitudes, which had a negative impact on the pace of changes towards a market economy. Similarly Landes (2000) emphasised that even after the fall of the socialist regime people were afraid of uncertainties of the market and longed for the safe monotony of state employment. Therefore one can expect that the longer the period under central planning, the more a society is dependent on the provision of goods by enterprises owned by the state, which can lead to the larger SOE sector.
An accession to the international organizations can been perceived as an important political determinant of institutional changes (e.g. Di Tommaso et al., 2007;Staehr, 2011;Piątek et al., 2019). Democratization and economic reforms in many post-socialist countries were supported by steps towards joining the European Union. States that plan to become a member of this organization need to fulfil the Copenhagen criteria. They require that a candidate country is located in Europe, has a market economy and formal institutions that preserve democratic governance and human rights. Moreover, rules operating within the member countries of the EU-acquis Communautaire-need to be adopted before joining the organization. As developed Western countries hold smaller SOE sectors than post-socialist countries , the accession to the EU might be seen as a factor that might lead to the decrease in the scale of state ownership in enterprises.
Another potentially important political factor influencing the scale of state ownership in enterprises is the ideological orientation of the rulers. Governments on the right of the political spectrum are likely to be more market-oriented and supportive of private ownership, while left-leaning parties tend to keep larger state-owned sectors. Opper (2004) showed that for transition economies privatisation processes of large enterprises were more intense when right-leaning parties were in power. Bjørnskov & Potrafke (2011) indicated that right-leaning governments fostered ownership changes in postsocialist countries and that the difference in privatisation processes between market-oriented and leftist governments was more substantially pronounced in the group of smaller-scale industries than in large-scale ones.
Large SOE sectors were traditionally associated with developing countries (World Bank, 1995). Szarzec and others (2019) showed that a negative correlation between the level of income and the scale of state ownership in enterprises was also present in the group of European states in the more recent period. In post-socialist economies state-owned enterprises were employed to provide social stability in terms of keeping employment and subsidising some crucial services especially at the beginning of the transition when an efficient social security system was missing (Bai, Li, Tao, & Wang, 2000). As this multitask role of SOEs was more likely in less-developed countries one can expect higher SOE shares at lower income levels.
State-owned enterprises are dominant in the natural resource sector (Kowalski, Buge, Sztajerowska, & Egeland, 2013;Szarzec & Nowara, 2017). Income from extraction of natural resources might also lower the pressure for economic restructuring -Esanov, Raiser and Buiter (2004) showed that resource abundance in Azerbaijan, Kazakhstan, Uzbekistan and Turkmenistan did not positively influence economic reforms. Therefore the scale of state ownership in enterprises may be higher in resource-abundant countries.
At the beginning of the transition period economies of the countries of Eastern-Central Europe and the former Soviet Union were substantially maladjusted to market conditions (Kowalski, 2013). What is more the newly formed independent states had to establish national institutions-including systems of justice and security, central banks and customs bureau-from scratch. The initial conditions of the transition are analysed in many empirical studies with the dataset proposed by de Melo and others (2001). It includes state independence and market reforms before the transition, the degree of over-industrialization, black market exchange rate premium, trade shares with socialist economies and repressed inflation. These measures reflect the level of maladjustment of post-socialist economies to market conditions and one can expect larger SOE shares in economies that at the beginning of the transition were less adapted to market rules.
To sum up, the literature on institutional changes provides a broad set of cultural, political and economic factors that potentially determine the scale of state ownership in enterprises. The aim of the following parts of the paper is to show which of them had a substantial impact on the scale of state ownership in enterprises in post-socialist countries.

Description of dataset
The empirical literature on the role of SOEs at the macroeconomic level is very limited because of a lack of comprehensive datasets on the scale of state involvement in the economy through enterprises. Szarzec and others (2019) addressed this substantial research gap by constructing micro-level-based economic weights of SOEs for European countries in the years 2007-2016. The state ownership indicator based on the share of SOEs in the group of large enterprises in terms of total assets and the 25% ownership threshold (TA25) is employed in the current analysis. As this variable covers only sixteen out of twenty eight post-socialist countries in the CEE region and the former Soviet Union it was decided to employ the large scale privatisation indicator (LSP) from the EBRD as a proxy of the scale of state ownership in enterprises for all twenty eight states. 6 It can be argued that since SOEs are concentrated in the  (2007)(2008)(2009)(2010)(2011)(2012)(2013)(2014)(2015)(2016). TA25 is the share of SOEs in the group of large enterprises in terms of total assets and based on the 25% ownership threshold . Correlation coefficient = -0.78. Source: Own elaboration based on (data from the EBRD and Szarzec et al., 2019).
State ownership in enterprises (TA25 from Szarzec et al., 2019) group of large enterprises and that the analysed countries started the transition with the large enterprise sector dominated by SOEs, the scale of SOEs in the economy should reflect the progress in privatization of the largest companies. In order to check this conjecture the LSP variable was compared with TA25. The correlation coefficients was equal to -0.78. This shows the strong negative correlation and one can point out that greater progress in privatisation of large enterprises (measured by the LSP variable) leads, unsurprisingly, to a lower share of state-owned enterprises in the economy. Therefore the LSP variable can be considered as a proper proxy of state ownership in enterprises for post-socialist countries. Figure 1 presents the correlation between mean values of LSP (2007( ) and TA25 (2007( -2016.
LSP and TA25 are employed as dependent variables in the econometric analysis. Based on the literature review from Section 2 sets of cultural, political and economic factors were included as independent variables. The data and their sources along with descriptive statistics are presented in Table 1. A correlation matrix of the variables is presented in Table A2 in the Appendix.
Based on the TA25 variable the SOE shares were the lowest in Hungary and Lithuania, while the highest in Russia and Bosnia and Herzegovina (see Figure 1). For the LSP variable (see Table A1 in Appendix; 2007-2014 mean values), the highest values (i.e., the smallest SOE shares) were recorded for Bulgaria, the Czech Republic, Estonia, Georgia, Hungary, Lithuania and Slovakia (4.00), while the lowest were for Azerbaijan (2.00), Belarus (1.59) and Turkmenistan (1.00). Figure 2 shows how the average values of the LSP variable were changing across three groups of post-socialist states: Central-Eastern European countries not being the EU member (CEE non-EU), the EU members (CEE EU) and the former Soviet Union countries being members of the Commonwealth of Independent States (CIS). At the beginning of the transition period SOEs were dominant in each group of post-socialist countries and in the first half of the 1990s substantial progress was made in privatization not only in the group of current EU members but also among the CIS countries. However after the year 1997, the pace of ownership changes in the latter group was much slower than in other post-socialist countries. The scale of state ownership in enterprises remained rather stable starting from 2005-2007 and the largest progress in large scale privatisation was made in the group of current EU members, while the smallest among the CIS countries.
In the group of cultural factors the dominant religion and years under central planning were included. 7 The dataset consisted of eleven predominantly Orthodox, eight predominantly Muslim, seven predominantly Catholic and two predominantly Protestant countries. Figure 3 presents the box plot of the LSP and TA25 variables by dominant religion. Protestant and Catholic countries were characterized by the higher levels of the large scale privatisation indicator than the Orthodox and Muslim states which shows that the role of the state as an owner of enterprises was limited in the former groups compared to the latter. Based on data from Szarzec and others (2019) differences between Catholic, Protestant and Orthodox countries were less pronounced and the only predominantly Muslim country, Bosnia and Herzegovina, had the largest SOE share. The length of the period under central planning was the longest in eleven states of the former Soviet Union (70 years and more). Another post-Soviet republics-Estonia, Latvia, Lithuania and Moldova-had a legacy of a non-market system of 51 years. Seven Balkan and six Central-European countries had a centrally governed economy for 41-47 years. The number of years under central planning was negatively correlated with LSP and positively with TA25 which suggests that the longer periods under central planning were associated with the larger SOE sector.
The group of political variables consisted of variables indicating an armed conflict, signing the Association Agreement with the European Union and the ideological orientation of the largest government party. The number of years in which a country was involved in an armed conflict (over the period 1991-2006) was negatively correlated with LSP and positively with TA25. The opposite relationship was indicated for the number of years after signing the Association Agreement with the EU. Finally the longer periods of the rule of right-leaning parties were associated with the smaller SOE sector when both LSP and TA25 were considered and for left-leaning parties this relationship was ambiguous-the higher number of years of left-leaning parties in power was associated with the larger SOE sector as measured by LSP but with the smaller one measured by TA25.
The set of economic variables contained the level of proved reserves of crude oil and natural gas per capita and GNP per capita in 1989. It was decided to use values of reserves to indicate resource abundance instead of the share of resource export in GDP or in total exports due to a problem of endogeneity of the latter indicators (this issue is discussed in e.g. Brunnschweiler & Bulte, 2008). The values of oil and gas reserves were highly correlated (correlation coefficient = 0.86) and the first principal component of these variables was included in the econometric analysis in order to limit a problem of multicollinearity. 8 There was a positive correlation between the variable representing natural resource abundance and the larger scale of state ownership in enterprises. Higher income levels at the beginning of the transition were related to the smaller future SOE sector.
Control variables consisted of initial economic conditions of the transition and physical proximity of Western Europe. Initial economic conditions were reflected by the first principal components of the variables indicating the de-8 The first principal component explains 93.3% of the sample variation of natural resources variables and has a positive factor loading for oil and gas reserves (scoring coefficients = 0.71).

Figure 3. State ownership in enterprises and religion
Note: the horizontal line inside the box presents the median value, upper hinge-75th percentile, lower hinge-25th percentile, upper adjacent line-the highest value in the group, lower adjacent line-the lowest value in the group (unless a dot is presented), dot-outside value.
Source: Own elaboration in Stata based on data from the EBRD. gree of over-industrialization in 1990, independent state before 1989, market reforms during the socialist era, black market exchange rate premium in 1990, trade shares with socialist economies as % of GDP in 1990 and repressed inflation 1987-1990(collected from De Melo et al., 2001. 9 As the first principal component demonstrates a positive factor loading for the black market premium, trade dependency and repressed inflation and negative factor loading for market reforms and independent state, this variable can be regarded as a measure of the maladjustment of economies to market conditions at the beginning of the transition. The higher level of maladjustment was related to the larger future SOE sector as measured by LSP, however this relationship was insignificant for TA25. Physical proximity of Western Europe was measured by the distance between the capital of the country and Brussels. This approach allows to control for the possible spatially dependent nature of the diffusion of institutions and norms being crucial to the construction of market economies including privatisation and the country's integration into the EU (Kopstein & Reilly, 2000). In the analysed dataset, the smaller distance to Western Europe was associated with the smaller SOE sector.

Research design
This study aims to indicate which factors had a significant impact on the scale of state ownership in enterprises in the group of post-socialist countries. The estimated model takes the following form:  Table 1. These sets are added to the model according to the procedure explained below. The model is estimated via OLS with identification based on the exogeneity of explanatory variables employed. This approach assumes that the scale of state ownership at the beginning of the transition was not correlated with omitted factors that were themselves correlated with the subsequent ownership changes and that the sets of cultural, political and economic fac-tors were not affected by the subsequent shares of state ownership in enterprises. The former assumption can be considered as plausible because when socialist systems were on the decline and the transition was about to begin the large enterprise sector was strongly dominated by SOEs (see Figure 2), which was a result of the domination of the socialist ideology favouring state ownership in the region. With the end of the socialist era this imposed ideological favouring of state ownership was likely to disappear. For the latter assumption an important issue is the fact that ownership changes introduced once seem to be long-lasting (see Figure 2; correlation coefficient between LSP and its firstlagged value was 0.97). Therefore state ownership indicators calculated for the periods 2007-2014 (LSP) and 2007-2016 are likely to strongly depend on their values from previous years (after the beginning of the transition). This leads to the question as to whether state ownership shares in the previous transition years might have affected some of explanatory variables. Dominant religion, years under central planning, an armed conflict, oil and gas reserves, income level in 1989, initial conditions of the transition and physical proximity to Western Europe can be definitely considered as not affected by the subsequent shares of state ownership in enterprises. However, the signing of the Association Agreement with the EU and ideological orientation of the largest government party might have been endogenous-the decision to join the EU might have been affected by the previous progress in economic reforms 10 and changes of the party in power might have been influenced by society's (dis)satisfaction with the progress or lack of privatisation. The following procedure is used in the calculations. First, the dependent variable is regressed on the sets of cultural and control variables (Models 1 and 7 in Table 2). Then the sets of political (Models 2 and 8) and economic (Models 3 and 9) factors, for which potential endogeneity can be definitely ruled out, are added separately and jointly (Models 4 and 10). Finally factors for which there were some doubts in terms of their exogeneity, are added in Models 5 and 12. 11 As many of the explanatory variables are significantly correlated with each other (see Table A2 in Appendix), the variance inflation factor was checked at each step. The VIF values exceeded the level of 10 for at least one variable in Models 5, 10 and 12, which showed that a problem of multicollinearity was present in these models. To overcome this issue, the variables with the highest p-values were excluded stepwise until the VIF values were below 10-these results are presented as Models 6, 11 and 13. Each model was also 10 In fact countries that signed the Association Agreement with the EU were characterised by substantially higher values of LSP in the year before the signing than other states in the same periods (these differences ranged from 0.41 points of LSP in 2002 to 1.37 points in 1995). 11 In the literature the variables representing the signing of the Association Agreement with the EU and the ideological orientation of the ruling party are often assumed as exogenous to progress in economic reforms and privatisation (e.g. Bjørnskov & Potrafke, 2011;Piątek et al., 2019).
denotes a reference group. Adj. R 2 is adjusted R-square.
Source: Own elaboration with Stata 15.
tested for heteroskedasticity and heteroskedasticity robust standard errors were calculated if needed. Table 2 presents the results of the econometric analysis. For the LSP dependent variable (Models 1-6), the coefficients representing predominantly Catholic, Orthodox and Protestant countries had positive signs and were all significant at least at the 10% level in Models 1, 2 and 6. For Model 4, the coefficients are significantly different from zero for Orthodox and Protestant, while for Models 3 and 5, for Orthodox only. In order to discuss whether the obtained results are not only statistically but also economically significant, one can compare the magnitudes of the coefficients to the average levels of the dependent variables. The mean value of the LSP variable was equal to 3.22. As the (statistically significant) coefficients for the Catholic, Orthodox and Protestant variables vary from 0.890 to 1.897, it can be indicated that differences in the scale of state ownership in enterprises between these countries and predominantly Muslim states were substantial not only statistically but also economically. When TA25 was considered the only cultural variable with the statistically significant coefficient was Catholic in Models 7, 8, 9 and 11. The magnitude of this coefficient (ranging from 32.545 to 47.281) and its negative sign suggest that predominantly Catholic countries had substantially smaller SOE sectors than predominantly Muslim ones. However, this difference was not significant when (potentially endogenous) political variables were included in Models 12 and 13. The length of the period under central planning was statistically significant at the 10% level in Model 1, however, it turned out to be insignificant when other sets of independent variables were added to the analysis with the LSP dependent variable (Models 2-6). For TA25, more years under central planning were statistically significant related to higher SOE shares in Models 7-11. The magnitudes by these coefficients show that an additional ten years under central planning led to the SOE shares higher by 18-31 percentage points.

Results
In the group of political factors the estimated impact of the number of years with an armed conflict was close to zero at each step of the analysis. The coefficient by the variable indicating the signing of the Association Agreement with the EU was insignificant for LSP (Model 5) and this variable dropped because of multicollinearity from Model 6 (as the variable with the highest p-value), but was significant and negative (i.e., associated with lower SOE shares) for TA25 (Model 13). The relationship between the number of years of right-leaning parties in power was insignificant for the LSP variable (Models 5 and 6), however, it was significant for TA25 in Model 13 and its negative sign shows that these parties were associated with the smaller SOE sector. The results were ambiguous for the variable representing left-leaning parties-the larger number of years in power of left-leaning parties was related to the larger SOE sector when LSP was considered (Models 5 and 6) but the opposite held for TA25 (Model 13). In the group of economic factors both natural resources and initial income levels were insignificant in each model. 12

Discussion
The results of the econometric analysis suggest that cultural factors had a substantial influence on the scale of state ownership in enterprises in post-socialist countries and the role of political and economic factors was less pronounced. The role of culture as an important determinant of institutional performance is broadly discussed in the literature (Alesina & Giuliano, 2015). The smaller scale of the SOE sector in predominantly Protestant and Catholic post-socialist countries might be perceived as being in line with the previous studies on this group of states that show that countries with dominant Protestant and Catholic religions were characterized by the higher pace of institutional changes towards the market economy and free political system (Schweickert et al., 2011;Piątek et al., 2019). What is more predominantly Orthodox states also had a smaller SOE sector than Muslim countries. As religion might shape the society's expectations towards the provision of goods based on market incentives or directly by the state (Grigoriadis, 2016;Tarabar, 2017) the analysis of the role of SOEs in the economy focusing on the differences between individualistic and collectivistic societies is an interesting avenue for further research.
The analysis with the data from Szarzec and others (2019) indicated the substantial relationship between the number of years under central planning and the larger SOE sector. This suggests that a longer period under central planning was associated with larger a SOE share. However, this result should be treated with caution, as in the group of sixteen countries for which TA25 is available, fifteen of them had a centrally planned economy for 41-51 years and Russia for 74 years. Therefore the relationship between TA25 and YUCP might be driven solely by a single country. In order to test this conjecture a dummy variable for Russia was additionally introduced into the analysis and the impact of the years under central planning turned out to be insignificant. 13 The impact of natural resource abundance-represented by the first principal component of oil and gas reserves-was insignificant in each model. As large 12 Additional analyses were conducted with the following independent variables: an accession to WTO, the former Soviet Socialist republics, population size, religion and ethnic diversity. Each of these variables turned out to be insignificant and led to the problem of multicollinearity.
The models presented in this paper were also recalculated with the dependent variables LSP and TA25 for the year 2014 instead of their average values. These calculations lead to the same conclusions as presented in the article. Results available upon request. 13 Results available upon request. enterprises operating in the natural resources' sectors are often state-owned Szarzec & Nowara, 2017), this indication is quite surprising. Therefore this field should be further investigated, especially in studies employing a broader set of analysed countries and more complex measures of natural abundance. The signing of the Association Agreement with the EU was shown to be insignificant in the analysis with the LSP variable and as significant with TA25. The negative sign in the latter case shows that the higher number of years after the signing of the agreement was associated with the smaller SOE sector, which is in line with Di Tommaso and others (2007), Schweickert and others (2011) and Piątek and others (2019) that showed that the prospect of membership in the EU was positively associated with market reforms. However the results of the analyses employing the signing of the Association Agreement with the EU as an exogenous variable should be treated with caution because this decision might be affected by the previous progress in reforms. The relationship between the number of years of left-leaning and right-leaning parties in power and the scale of state ownership is ambiguous. Similarly to the last discussed variable these results should be also taken with a grain of salt.
An important caveat to the interpretation of the results and a comparison between the analyses with the LSP and TA25 variables is that the latter indicator is available for only sixteen out of the twenty eight post-socialist countries. What is more the selection to this sample is also likely to be biased because the construction of the dataset by Szarzec and others (2019) was dependent upon micro-level data availability, which seems to be substantially worse for less-developed economies. In fact the average values of the LSP indicator for countries included in the dataset of Szarzec and others (2019) was 3.54, while for those not included-2.79. Therefore the set of countries included in the analysis with TA25 is likely to be less heterogenous than the overall group of post-socialist countries, which might lead-along with the smaller sample size-to the smaller explanatory power of independent variables. Concerning the LSP variable one needs to keep in mind that the measure from the EBRD includes a component related to corporate governance, which might lead to relatively lower values of LSP in countries where corporate governance improvements were lagging behind. Therefore, despite a strong correlation between LSP and TA25, the large scale privatisation indicator might suggest relatively higher SOE shares when privatisations were not accompanied by corporate governance restructuring. The two above-mentioned caveats unambiguously indicate the need to establish micro-level-based SOE measures for a broader set of countries.

Conclusions
This study contributes to the literature by analysing the little studied field of factors influencing the scale of state ownership in enterprises. To address this research gap the data for twenty eight post-socialist countries were collected and the large scale privatisation indicator from the EBRD and the SOE measure from Szarzec and others (2019) were regressed on sets of cultural, political, economic and controls variables. The results show that cultural factorsrepresented by the dominant religion-had a substantial impact on the scale of state ownership in enterprises while the role of political and economic factors was less pronounced. This emphasises the importance of cultural factors in shaping the scale of state ownership in enterprises.
State-owned enterprises still play an important role in the world economy and state ownership in enterprises is present not only in post-socialist countries, but also in developed states. While this study provides some empirical evidence on the determinants of the prevalence of SOEs in the economy, further research focusing on the broader set of countries, as well as including more precise measures of economic weight of SOEs is still needed.  Notes: Pairwise correlations. The asterisk denotes significance at the 1% level.

Appendix
Source: Own elaboration.


THE IMPLEMENTATION OF MAQASHID SHARIAH IN ZAKAT INSTITUTION: COMPARISON BETWEEN INDONESIA AND MALAYSIA

Zakat has been widely described as a tool of income distribution. Not with standing of the potential of zakat in Indonesia and Malaysia, however, there are some issues in zakat institutions. This study aims to analyze institutional program of collecting zakat in reaching Maqashid Sharia and also to identify the issues over the program conducted by the Selangor and DKI Zakat institutions. This study conducted a case study approach which involved two Zakat institutions in two different countries; Lembaga Zakat Selangor in Malaysia and Badan Amil Zakat Infaq and Sadaqah in Indonesia. Zakat Institution should be the leading institution in economic empowerment of society by using Maqashid Sharia as benchmark indicator to design zakat distribution program. This study found that LZS has fulfilled all aspects of maqashid ShariaSharia in zakat distribution program while BAZIS DKI meet three aspects of maqashid Sharia namely hifdzu ad-din, hifdzu an-nafs and hifdzu an-nasl. It is acknowledged that the zakat institutions have made many improvements, there are still few issues that need to be highlighted to meet the needs of the society. The following recommendations are given to empower and enhance the role of zakat particularly in accomplishing the objectives of the Sharia.

INTRODUCTION
income distribution (A. Kasri, 2016) and a development tool to alleviate the poverty (Johari et al., 2014).
As one of the interesting instruments of Islamic social finance, Zakat has shown its supportive development in many Muslim countries and impact on humanity. It has done this by institutionalization of zakat to be spent for social good of society. In many Muslim countries there are institutions responsible for the collection and redistribution of Zakat. This pool of fund if collected efficiently and managed securely has successfully been used for offering social service in communities and societies. Zakat institutions is an integral part of the Islamic socio-economic system. It has a major impact in complementing the government's poverty eradication effort concern on the poor and the needy Muslim. Further, the effectiveness in carrying out the duties, zakat institutions would depend on several factors: expansion of new resources for zakat, the collection of tangible and intangible assets, well-managed zakat assets, the efficient distribution and the thoroughness of implementation of Islamic rules . As mentioned by Kahf, Zakat in OIC countries could contribute from 1.8% up to 4.34% in their GDP (Firdaus et al., 2012). Besides, according to the data given by SESRIC (2018), zakat which predicted to be valued at USD 2 trillion in 2015, is expected to increase up to USD 3 trillion in 2020 to reach more people especially for those who in need.
In Indonesia, zakat collection practice has been conducted and managed by Indonesian Zakat Board (Indonesian: Badan Amil Zakat Nasional, abbreviated: BAZNAS). It is responsible to collect and distribute zakat, infaq, and alms (ZIS) at the national level. Moreover, according to the Law Number 23 of 2011 specifically mandates the Baznas as the primary executor in zakat management in Indonesia, and the government acts as an advisor and supervisor towards the zakat management conducted by Baznas (Puskas Baznas, 2019).
Meanwhile, in Malaysia zakat collection has been conducted under the jurisdiction of the respective state by its leader or Sultan. It divided into some institutions regarding with its states. As illustrations, Pusat Pungutan Zakat Wilayah Persekutuan (1991), Lembaga Zakat Selangor (1994), Pusat Urus Zakat Pulau Pinang (1994), Pusat Kutipan Zakat Pahang (1995), Pusat Zakat Negeri Sembilan (1998), and Pusat Zakat Melaka (2001  . In Indonesia, zakat has the potential to be developed economically. This has been proven by the past decade, Zakat has experienced rapid development to help the society, particularly on education sector and Muslims' Welfare (Puskas Baznas, 2018). In 2018, the estimated potential collection of zakat was accounted for Rp 233 trillion or 3% of the GDP, but the total collected amount was only reached about Rp 8,2 trillion or 3,4% of its potential. It is interesting to note that, among all the provinces in Indonesia, DKI Jakarta is the highest contributor of Zakat, Infaq, and Shodaqoh (ZIS) collection (Puskas Baznas, 2017). Apart from that, in Malaysia, Lembaga Zakat Selangor (LZS) has successfully collected the highest amount of Zakat from 2015 until 2019 with the total amount over 600 million Ringgit per year (JAWHAR, 2019).
Not with standing of the potential of zakat in these two countries, however, there are some issues in zakat institutions. A study by (A. Kasri, 2016) mentioned that zakat institution still lack of poor performance and lack of appropriate assessment methods to measure their own performance. Besides, as mentioned by Muharman et al. (2011) in Malaysia, zakat institution is still lack on zakat distribution management process. It does not have a good performance compare with their zakat collection performance which increase significantly in every year. This view is supported by Ab Rahman et al. (2012), mentioned that zakat distribution in Malaysia did not reach the asnaf or targeted recipient due to the lack of publicity by the authority as well as because of lack of knowledge of the society.
On the other hand, Maqashid Sharia or Sharia purposes has been used by the Muslim scholars to propose Islamic reform and revival in many aspects of live and to address many society's problems in line with the Islamic principles. Traditional classification of maqashid are necessities (Darurat), needs (Hajiyat), and luxuries (tahsiniyat). Further, necessities will be divided into preserving of faith, soul, wealth, mind and offspring (Kholish & Roy, 2020). As part of Islamic social finance, Zakat collection and distribution should in line with the Islamic principles of social justice or maqashid ShariaSharia in order to uplift the quality of ummah and to achieve the objectives (Maqashid) of Sharia. Maqashid Sharia emphasizes on human well-being from spiritual, physiological, intellectual and economic perspectives.
As the highest zakat contributors in Indonesia and Malaysia in last three years, this study compares Lembaga Zakat Selangor and BAZIS DKI Jakarta. This study aims to analyze institutional program of collecting zakat in reaching Maqashid Sharia and also to identify the issues over the program conducted by LZS and BAZIS DKI institutions. This paper is organized as follows. Section 1 offers introduction with background of the study, problem statement, and research objectives. In section 2, there are some literatures review of previous research regarding with the Zakat Institution in Malaysia and Indonesia. Section 3 put the brief explanation of the research method that used by the study. After that, discusses the finding of the research in section 4 and followed by section 5 that wraps conclusion as well as recommendation.
Zakat as A Tool to Alleviate Poverty. Qardawi and Kahf (2000) said that Zakah in lingual term means to grow or increase. AAOIFI (2001) define Zakah as "blessing, purification, increase and cultivation of good deeds". In Sharia, it is an obligation in respect of funds paid for a specific type of purpose and for specified categories [. . .] The government may also authorize shareholders to pay it personally if it is satisfied that they will do so, or it may instruct Islamic banks to organize its payment on behalf of Islamic banks' shareholders, using the combined basis for nisab as described".
The commandment of Zakah was mentioned in the Quran multiple times and majority of it were paired with Solat (Ibn Taymīyah, 1983). This shows the weight of this third pillar in Islam. The main objective of Zakah is to help the poor and needy section of the society. In fact, Zakah is not given or paid to the designated group due to mercy but it is the right of the poor and needy especially to receive part of the wealth from the rich (Embong et al., 2013).
A multidimensional issue surely require phases of solution. Sadeq (1997) gives a 3 phase solution for poverty eradication which include Zakah as the corrective measure alongside voluntary contribution (Sadaqah) in the same category. Dogarawa (2012) and Qardawi and Kahf (2000) are among scholars and writers opining that this third pillars with which without it the structure of this religion cannot stand is without doubt a perfect tool in alleviating major economic problem in the society, poverty. The effectiveness of this tool for poverty reduction can be traced back in history of early Muslims. In the time of Caliph Umar Al-Khattab and Caliph Umar Abdul Aziz, poverty was totally eradicated that it was nearly impossible to find any receiver. Thus, it is proven twice that wiping out poverty in its entirety is not impossible (Embong et al., 2013).
To understand how Zakat helps reduce this unwelcome situation, one must first understand the nature of Zakat and the structure of it. On whom it is obligate and to whom will it be distributed. There are various of verses in the Holy Quran that describe Zakat as one of the obligations to Muslim. In Surah Al-A'raf chapter 7 verse 156, Zakat is described as a mean to obtain Allah's mercy. While in Surah At-Taubah verses 11 and 91 narrated Zakat as a symbol of brotherhood and a peculiar characteristic of a faithful community. From this, it is safe to say that Zakat is not your ordinary form of voluntary charity given to the needing, rather it is much more than that. It is a divine obligation from the Creator Himself which we will be questioned in front of Him on the day of judgement. Not only is it the act of love to strengthen the bond between community members but also building your connection with the Almighty.
Hossain (2012) using numeric data from Akkas (2006) and Sohag (2008) in a case study in Bangladesh discover that the Zakat collected from the urban area covered 64% of urban poverty in 1997. The number further rise to 82% in 2005 proving that Zakat is without doubt the perfect instrument to alleviate poverty.
The 8 designated receivers of Zakat can be categorized into 2 groups according to Wan Mohd Khairul Firdaus and Mahadi (2013). The first classification is those with needs which are the poor, the needy, captives seeking freedom, debtors and wayfarers. As we can see from the 8 fixed expense categories, 5 of them are meant for poverty reduction. That reaffirm Hassan & Ashraf (2010) argument regarding Zakat being a tool for poverty alleviation which they explain how Zakat is included in the Poverty Alleviation Scheme in Islam that was first introduced by Sadeq (1995) The second division is those who receive Zakat based on their vitality as Zakat recipient not their needs. Amil who facilitate the management of Zakat both collection and distribution, the converts (Muallaf) who were given Zakat to attract more people towards Islam, fi-sabilillah who are responsible to uphold and spread this religion worldwide. Can this division change as time pass by? The needs of societies have changed; thus, the Muslim jurist and scholars are depending on ijtihad which is "Independent Reasoning" in their decision making as stated by Shaharuddin (2020). He Mustafida, Kurnia, Fauziah, Subri, Faiz, Published by University of Airlangga.
This is an open access article under the CC BY license (https://creativecommons.org/licenses/by-nc-sa/4.0/) also emphasis the need of ijtihad to minimize the gap between Islamic theory and the contemporary reality.

Maqashid Sharia Approach in Determining the Performance of Zakat Institution
Maqashid Sharia is a comprehensive and dynamic framework for developing an alternative theory of economic development. As-Syatibi argued that the purpose of Islamic rules implementation to achieve benefit or welfare. As-Syatibi and Al Ghazali further offered theory in maqashid al Sharia by limiting the provision of Sharia to the five essential elements or universal values (al-daruriyyah al-khams), i.e. religion, soul, intellect, lineage and wealth (Hapsari, et al., 2017;Oladapo & Rahman, 2016).

Preservation of Faith (Al-Din)
The preservation of faith at the individual level is achieved through the observance of the different kinds of Ibadah, such as five prayers, fasting, and performing Hajj (Afridi, 2016). Zakat program of the institution would be in this category if it could facilitate Muslim to perform their ibadah.

Preservation of Life (An-Nafs)
Life is essential and valuable to everyone. Preserving everyone's life is equally important and obligatory to every individual and society. This study analyzed to what extent zakat program could carry every Muslim to preserve their life.

Preservation of Lineage (An-Nasl)
Islam very concerned about lineage in order to maintain the continuity of Islam and Muslim as well. It also means ensuring that relationships between men and women are respectful and responsible. Zakat programs also should facilitate Muslim to preserve individual rights to have lineage.

Preservation of Intellect (Al-Aql)
Al-'Aql or the intellect is a great gift from Allah to mankind and one of the human capacities that differentiates man from animals. Allah has ordered that Muslim should protect this precious gift by utilizing the mental for the benefit of all not for any kind of evil or anything might lead to destruction. Allah and Rasul also ordered every Muslim to use their intellect to get knowledge so that will reach success (fallah) in the world and hereafter (Afridi, 2016). Zakat programs should cover the education needs of asnaf. It can be religious education or general education as well.

Preservation of Wealth (Al-Mal)
Acquiring property is a basic human need. Everyone has his/her property and would like to have all necessary protection and security for his/her property. Islam has ordered that no one should transgress and acquire the property of others without legitimate reasons and without proper contract (Afridi, 2016). Zakat programs have to facilitate eight group (asnaf) to acquire halal income because one of Zakat goal is to distribute wealth and property.
The old scholars such as Al Ghazali in Chapra (2008)define Maqasid Sharia as objective behind Sharia and that is to promote the safeguarding if five pillars which are safeguarding of faith, human self, intellect, posterity and wealth. Al-Shatibi's opinion regarding this issue is in line with Al-Ghazali but he further listed the five pillars under the essential objectives not in exigencies nor embellishments. Other modern scholar in the extension period extend the definition and interpretation of Maqasid Sharia into a slightly wider expression which is found in Auda (2008).
For measuring the performance of the institution, he suggested using the Ghazilian and Shatibian interpretation of Maqasid Sharia due to its simplicity and comprehensiveness especially when applied to a small scope of people. At the end of his paper, he hoped that his suggestion of using a new KPI to Zakat institution will be used in the future.
Regrettably, no effort has been done to implement this approach as a new KPI to any institution in Malaysia or Indonesia. Thus, we are trying to take the first step in applying this approach to two Zakat institutions located in Malaysia and Indonesia. The more comprehensive the distribution program is to fulfill the five objectives of Maqasid Sharia, the better the performance of that specific Zakat institution is.

RESEARCH METHOD
This paper is conducted by adopting one of the qualitative methods which is a case study approach. While this particular method has been criticized by many throughout the years, its advantages are undeniable. This method is widely recognized in research especially in social science where in-depth explanation regarding certain phenomenon is required as it allows inspection in detail of intricate issues (Zainal, 2007). A case study according to Yin (1984) is "an empirical inquiry that investigates a contemporary phenomenon within its real-life context; when the boundaries between phenomenon and context are not evident; and in which multiple sources of evidence are used". When a quantitative method using numbers usually provides concerns about its limitation in bringing forth a holistic explanation of social problems, the case study approach goes beyond the statistical result (Zainal, 2007). One of the advantages of this method is allowing the exploration and understanding of the real-life environment by interpreting real-life data which may not be attainable using experimental or survey research. For that particular reason, the authors decided to adopt the case study approach in completing the paper.
The study conducted involved two Zakat institutions in two different countries; Lembaga Zakat Selangor in Malaysia and Badan Amil Zakat Infaq and Sadaqah in Indonesia. In acquiring the data, we primarily used the library research method as a process to analyze the existing data and compare it from both institutions. Data from 2015 until 2017 was collected from the annual report and the official website from the two institutions and proceed to be analyzed using Microsoft Excel 2019 version. The authors then compared the data by using the Maqasid Sharia approach to accomplish and attain the objective of this paper and developed the conclusion about the distribution programs between both institutions. The finding of the data will be shown in the findings section.

RESULT AND ANALYSIS
Zakat is reliable instrument to reduce gap between rich and poor (Canggih et al., 2017). In early Islam civilization, zakat has proven to be effective instrument to overcome poverty issue (Al-Mubarak, 2017). Zakat institutions both in Indonesia and Malaysia have divided their distribution programs into consumption and productive category.

BAZIS DKI Jakarta
The House of representative has issued Zakat Management Act No. 23/2011 replacing Zakat Management Act No. 38/1999 as legal statue for zakat institutions operation in Indonesia. According to the newest Act, there are two types of zakat institution, which are The National Board of Zakat (Badan Amil Zakat Nasional abbreviated as BAZNAS) and private zakat institutions (Lembaga Amil Zakat abbreviated as LAZ), which must be approved and accredited by government (Ministry of Religious Affairs) to get operation license (Beik & Arsyianti, 2018). Zakat assortment in each area of Indonesia has different sums. In 2016, DKI Jakarta is the biggest Zakat, Infaq, and Shodaqoh (ZIS) donor in Indonesia which has gathered 130.98 billion Rupiah, trailed by West Java, West Sumatera, Riau, and East Java (Outlook Zakat Indonesia 2017. Zakat in DKI Jakarta was overseen by BAZIS DKI Jakarta as a non-basic zakat organization claimed by the public authority of DKI Jakarta Province. This establishment has disseminated zakat to 13,936 fakir and miskin family, and furthermore to 20,647 mustahik from different classifications (mualaf, gharimin, ibnusabil, fii sabilillah) during 2017. In most recent three years, Zakat assortment of BAZIS DKI Jakarta has expanded essentially. BAZIS DKI Jakarta gathered 80.6 billion Rupiah in 2015, 85.8 billion Rupiah in 2016, and 144.4 billion Rupiah in 2017 ( Figure 1). This reality shows that DKI Jakarta has positive pattern in gathering and conveying zakat for late years.
BAZIS DKI Jakarta Allocation is directed by Governor Regulation No. 30/2017. This zakat organization disperses ZIS assortment dependent on The Prosperous Jakarta program (Indonesia:Jakarta Sejahtera), which comprises of five principle programs, for example devoted Jakarta (Jakarta Bertaqwa), Smart Jakarta (Jakarta Cerdas), Independent Jakarta (Jakarta Mandiri), Attentive Jakarta (Jakarta Peduli), and Zakat Aware (Jakarta Sadar Zakat). BAZIS DKI Jakarta has 27 zakat appropriation programs. In conservation of confidence, there are six projects identified with Islamic issues which the establishment accommodates the asnaf, explicitly the Sabilillah and Muallaf. BAZIS DKI Jakarta conveys their 23.17 % of zakat assortment (in 2017) to the operational guide of syiar Islam exercises, the operational guide for Muallaf exercises, Ulama recovery grant, profound instructing and strict exercises, Qari and Qari'ah training program, and great guide. These projects are remembered for "Jakarta Bertaqwa" as the primary program of strict area strengthening.
In protection of life, BAZIS DKI Jakarta circulates their zakat assortment through 13 projects from 2015 until 2017. These projects expect to improve the personal satisfaction of the asnaf, particularly for the Sabilillah, Fakir, Miskin, Gharimin, and Ibnusabil. The individual guide for Quran educators, Mosque cleaners, Muazin, Imam, Madrasah's privileged instructors, and TPA/TKA/TPQ instructors are under "Jakarta Bertaqwa" as the primary program. Then, the circulation of individual guide for vagrants, dhuafa (counting clinical costs, survivors of cataclysmic events and humankind issues, expired travelers, Gharimin, Ibnusabil, clinical costs, and facilitating the weight of lives) are remembered for "Jakarta Peduli" as the primary program of social area strengthening.
BAZIS DKI Jakarta additionally disperses their zakat assortment for educational program of their destitute residents. To accomplish the assurance of acumen, this zakat board has 6 projects in 2015. At that point, it expanded to be 8 projects in 2016. In 2017, a portion of the projects in instructive concerns were blended, in this way diminishing it into 4 projects. The projects are including grants, organization foundation, school charges overdue debts help, and instructive guide for exceptional examination. BAZIS DKI Jakarta gave grant program to senior secondary school penniless understudies in 2016, however since 2017 they don't give it any longer. This is because of the worry of any abused awards since DKI Jakarta government issues Kartu Jakarta Pintar (KJP) which is additionally an instructive guide for the secondary school understudies. Notwithstanding, this zakat establishment actually works this program for college understudies from miskin families in 2017 (BAZIS DKI Jakarta 2016 Report, 2017). These projects are remembered for "Jakarta Cerdas' which intends to help the asnaf improving nature of instruction.
In 2015 ─ 2017, the most noteworthy zakat appropriation of BAZIS DKI Jakarta is in safeguarding of life. It is adding up to 41.4 billion Rupiah in 2015, 47 billion Rupiah in 2016, and 53.8 billion Rupiah in 2017. In those 3 years, conservation of life spends over half of their zakat assortment. This reality shows that the fundamental focal point of BAZIS DKI Jakarta is still on agreeing the essential requirements of the asnaf. Other than the assurance of life, BAZIS DKI Jakarta likewise has solid expectation in supporting different pieces of maqashid Sharia, for example, protection of confidence and keenness. In 2015 and 2016, conservation of confidence spends around 16% of their zakat assortment. In contrast to the earlier years, safeguarding of confidence spends more in 2017 which is adding up to 23.17% of their zakat assortment, in this way making it as the second greatest bit in zakat conveyance financial plan in that year.
Two purposes of maqashid Sharia which are not covered by BAZIS DKI Jakarta zakat conveyance programs are maqashid al-Mal (abundance) and maqashid an-Nasl (genealogy). As a matter of fact, BAZIS DKI Jakarta has a primary program to safeguard abundance called "Jakarta Mandiri" which comprises of abilities preparing programs and hibah for the mustahik. This program focusing on the jobless dhuafa which expected to be autonomous and turning out to be muzakki. Aptitudes preparing involves cullinary craftsmanship preparing, car repairman preparing, PDA administration preparing, and mustahik checking programs. In the interim, hibah is given to the mustahik as capital guide for their business (BAZIS DKI Jakarta 2015 Report, 2016). All things considered, those projects are excluded from this examination on the grounds that the establishment doesn't utilize any zakat however infaq assortment in working the projects.
Hifdzu an-nasl is one of fundamental focuses in maqashid Sharia. However, shockingly, BAZIS DKI Jakarta doesn't have any program with respect to this point until 2017. In another side, as indicated by Health Profile of DKI Jakarta (2017), the measure of baby mortality in Jakarta during 2017 is 938 cases. It shows that there is an expansion from the earlier year which has 677 cases. Moreover, in excess of 400 perished kids in a day in Indonesia are from helpless families and most underestimated (UNICEF Indonesia, 2013). Hence, more consideration and greater endeavors are required in taking care of labor issues in DKI Jakarta. Afterward, zakat as the Islamic social asset fundamentally can help these issues by improving the nature of medical care offices and giving labor help, particularly for the penniless families. Hence, the protection of heredity as a component of maqashid Sharia can be accomplished.

Lembaga Zakat Selangor in Malaysia
After 1990s, the collection of zakat in Malaysia was privatized thus encouraging creativity, innovation, proactive actions and increase the quality of delivery system (Ab Rahman et al., 2012). Some zakat institutions are established in every state as the subsidiary bodies under MAIN, such as Pusat Pungutan Zakat Wilayah Persekutuan (1991), Lembaga Zakat Selangor (1994), Pusat Kutipan Zakat Pahang (1995), and Pusat Zakat Melaka (2001). In last five years, Selangor has collected the highest amount of zakat among other states in the country, with the highest amount is in 2019 amounting to 855 million Malaysian Ringgit (JAWHAR, 2019). Lembaga Zakat Selangor (LZS) as the state's zakat collection institution has reached a more professional system indicated by their comprehensive data disclosure. They also deliver zakat fund in varies programs, both productive and unproductive aid. LZS has implemented 67 zakat distribution programs in 2017. Based on maqasid al-ShariaSharia, most of these programs have a direct impact on hifdz Ad-Din or preservation of faith, amounting to 27 programs. LZS has distributed zakat funds to the mustahik in the form of assistance to build religious institutions, mosques, and religious education classes. The preservation can be encouraging the practice of religion, calling to it, showing it, providing facilities for proper spiritual development and hindering any means which aims to debilitating the religion (Lamido, 2017).
To preserve life of the asnaf, LZS has 22 programs such as monthly assistance, home rental assistance and emergency help. Based on this maqasid, zakat funds are distributed to meet asnaf's fundamental need like food and home. To guarantee the preservation of humans' lives, Islam orders all the adherents to consume only halal and thayyib food. Besides, LZS has 11 projects to achieve the protection of 'aql or intellect. The projects are including scholarship, establishment of educational institution and provision of school needs. Intellect is important to be escalated through providing education and other incentives that can make the educational system more effective. Furthermore, intoxicants and any superstitious believes should be avoided since they can hinder its proper functioning (Lamido, 2017).
LZS has noticed hifdz An-Nasb or preservation of lineage as well by offering a program which is wedding assistance project for the asnaf. Meanwhile, there are nine programs have been conducted to preserve the wealth. All the programs aim to increase interest of doing business as well as to develop businesses owned the asnaf through skill training and capital assistance. LZS provided hardware or equipment or capital to let the asnaf start or develop their businesses.  In 2017, zakat distribution programs of LZS had decreased compared to two years before; 80 in 2016 and 83 programs in 2015. However, the institution has the highest zakat distribution which aims to preserve life at MYR 345.8 million. This fact shows the main focus of LZS is still to fulfill the fundamental need of the asnaf. Hifdz Ad-Din is right after which amounting to MYR 272.8 million. Next is Hifdz Al 'Aql which also has high enough allocation around MYR 123.3 million. Meanwhile, Hifdz Al-Maal gets the second lowest funds allocation at MYR 16.1 million. This program should be preserved and enriched through performing some other alternative sustainable ways for wealth generation, utilization, distribution and growth (Lamido, 2017).
The lowest funds were allocated for hifdz An-Nasb which is only MYR 109,000. This fact shows that preservation of lineage is not main focus of LZS in distributing zakat. In fact, Islam is concerned about this preservation which indicated by ordering Muslims to be married on one hand, and prohibit fornication and rape on the other (Lamido, 2017). Beside wedding assistance, this preservation also should cover anything that can prevent either illicit sexual intercourse or any sexual violence such as rape (Lamido, 2017). Nowadays, there are many issues regarding sexual deviation. Therefore, LZS is expected to add any program to prevent and to heal sexual deviation as long as the persons are in asnaf category.
Although consumptive zakat is permissible, especially for those who have a higher chance of having difficulty in supporting themselves such as the disabled and elderly, zakat is encouraged to be distributed in the form of capital finance to the poor and needy. It aims to encourage productiveness and business activities among the asnaf and being expected to get them out of the poverty line since they are more independent and able to support themselves (Farah Aida et al., 2012). However, it is important to ensure that the asnaf who receive capital finance will have an assistance program from the zakat institution so that the business will run effectively (Nurlita & Ekawaty, 2017). It is necessary to assist the mustahik in utilizing the given capital efficiently and convince them if they can do it. Other than that, it will also avoid any funds misuse by the mustahik, for instance utilizing the capital assistance for momentary consumptive needs instead of developing their businesses.
Published by University of Airlangga.
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Comparison between Lembaga Zakat Selangor (LZS) and BAZIS DKI
In zakat distribution, LZS has met all the Maqashid Sharia generally, but in last three years LZS accentuate hifdzu ad-din and nafs. On the other side, BAZIS DKI Jakarta programs don't fulfill all the five parts of the maqashid Sharia in most recent three years. It is essential to Zakat organization to meer at all maqashid Sharia. The way that the maqashid are worried about the safeguarding and improvement of human existence, confidence, astuteness, successors, honesty, and abundance shows that the maqashid can be used as benchmark in arrangement of zakat distribution program. LZS in 2016 had the most projects added up to 32 on hifdzu ad-din and the least program is just one on hifdzu an-nasl. Distinctive with LZS, BAZIS DKI had the most projects on hifdzu nafs in the measure of 11 projects while hifdzu ad-din has just four projects ( Figure 5). Also, on planning, LZS grouped the most elevated sum 51.03% to protection of life and the least is hifdzu an nasl. BAZIS DKI conveyed the most noteworthy spending plan to hifdzu nafs at 56.54% and the least allotment is hifdzu ad-din added up to 16.51% ( Figure 6). The most recent year 2017, the most projects of LZS were 27 to hifdzu ad-din and like two years prior, the least program was one to hifdzu an-nasl. At the very year, BAZIS DKI had the most noteworthy projects on hifdzu an-nafs added up to ten and the least on hifdzu al-aql add up to four (Figure 7). Besides, on planning, LZS disseminated 45.61% of their absolute spending plan to conservation of life and 0.01% to hifdzu addin. Like LZS, BAZIS DKI designated the most elevated financial plan 66.53% to hifdzu an-nafs and the least 16.26% to hifdzul al aql (Figure 8).
By and large, in most recent three years, both organization LZS and BAZIS DKI zeroed in on zakat circulation for conservation life and confidence. In most recent three years, protection of genealogy turns into the least spending plan in zakat dispersion by LZS while BAZIS DKI didn't have any program to encourage it though this safeguarding is likewise significant on the grounds that it is identified with the people in the future. LZS likewise have a few projects in protection of riches while BAZIS DKI doesn't have by any means. It is on the grounds that neediness pace of Indonesia is higher than Malaysia. It should be a consideration for BAZIS DKI to meet all aspects of maqashid ShariaSharia in compiling zakat distribution program. It is because five aspects of maqashid ShariaSharia become a basic need for every people.

Zakat Institution: The Way Forward
Based on the study, the preservation of the lineage is being overlooked compare to the four aspects. In fact, preservation of the lineage is very essential to sustain the Muslim society in promoting Islam as the way of life. However, due to the current high standard and cost of living that keep arising from time-to-time, many Muslims parents choose to have less children which significantly reduce the population of the Muslims. In the long term, this situation may increase the possibility of issue related to the society specifically Muslim's lineage. Therefore, in order to cater this issue, this study recommends the zakat institutions to assist wedding expenses fund for the poor to get married. This study also suggested funding the birth of needy people to encourage the birth among Muslims.
Zakat takes significant function to destitution allevation, so the proficiency of Zakat foundation in circulation should be need. Protection of heredity and abundance should be worried for both zakat foundations. Conservation of heredity may have other imaginative projects, for example, labor help. Protection of abundance, for example, capital guide is a key to urge the poor to build their way of life. Henceforth, zakat organizations should utilize maqashid viewpoint to survey their presentation.
Zakat appropriation technique is as yet centered around the periodical type of move installment which can't explain the neediness issue in the Islamic culture. The current idea of appropriation must be invigorated with new methodologies that are equipped for delivering more business people among asnaf to be free and ready to help themselves and their families to carry on with better lives. The drawn out objective of this venture is to deliver and raise serious Muslim business visionaries. Capital guide of Zakat that is appropriated to the asnaf who meet certain measures would be utilized to begin or to proceed with their business (Rosbi & Sanep, 2010).
Capital is simply given to asnaf who are as of now prepared and go through a cycle from business viewpoint to upgrade asnaf dominance from hypothesis and commonsense parts of the business world. A gathering of asnaf who are applied capital help ought to have the bookkeeping aptitudes, business arranging, stock administration, etc. This is for guaranteeing them to have flawlessness of reasoning and high eagerness to settle family. Helping the needy individuals by straightforwardly giving them an amount of cash to purchase their necessities, is in reality just a transient arrangement (Ab Rahman et al., 2012).
The issues that emerge is whether the focal point of Zakat organization was convey Zakat in term of capital help to the asnaf who is submitted, qualified and having the standards to be a business person (Ramli et al., 2011). Checking should be done effectively by the organization of Zakat in the wake of circulating the capital help to the asnaf. Checking structure, for example, occasional visits for in any event once like clockwork, account reviewing, counsel, capital infusion, month to month report should be made to guarantee that the business attempted by asnaf truly help them as far as pay and make them to be Zakat payer (Ramli et al., 2011).
The lack of awareness of zakat among the Muslim needs to be address as well. Therefore, the government need to take a step forward to make zakat as a compulsory topic inside the Islamic studies especially in school in an attractive way and approach. This initiative is to spread and wide the awareness about the important of zakat, its impact and at the same time the wisdom lies behind the command of zakat. Furthermore, organizing sharing sessions, webinar, seminar and conferences can be one of the initiatives to increase the awareness among Muslims to fulfil their religious obligations especially for those in rural and remote areas who have least access to join.
There is a need to improve/reinforce the zakat the executives framework to address the failure issue particularly in circulation viewpoint. Human asset likewise assumes significant function for Zakat foundation to dispersion zakat. The bad quality of HR could authorize zakat not as per its capacity (Fitriani & Priantina, 2018). HR of zakat foundation ought to comprehend the motivation behind zakat to reach maqashid Sharia. With the goal that zakat is required to be a practical apparatus to satisfy all parts of maqashid Sharia.
In addition, in spite of the fact that the organization of zakat has gone through numerous upgrades as far as framework, conveyance framework and government straightforwardness. There are still a few issues should be handled to guarantee that the organization of zakat is proceeding onward the correct track, hereafter to annihilate destitution and to redesign individuals' way of life broadly and universally .
Furthermore, this study suggested the governments to issue proper regulatory framework which may give high impact activities that can empower and highlight the Maqasid Sharia comprehensively. Constructive programs need to be held by government which is essential to improve the distribution of zakat institutions. Raising the awareness and the importance of distribution in zakat could be done through providing conducive education system such as establishment of vocational centers and technical educational institutions (Ab Rahman et al., 2012). Alternatively, they can provide the zakat fund in the form of training centres or assist in a business that can bring return, thus enhance the standard of living of the unfortunate people through it instead of giving zakat in the form of money. It is efficient to alleviate the poverty and maximize the zakat to its fullest potential. It should be provided and the basic need (dharuriyyat) should be the top priority and aim for comfort (hajiyyat) afterwards. The significant role in this matter is obviously amil (the collectors and the distributors of zakat). Zakat funds need to be well-managed and the zakat institutions need to monitor and supervise the implementation made by the amil to ensure the funds are channeled to the right asnaf and to prevent suspicious activity. They must be chosen based on their trustworthiness, ethics and manners. Zakat is not only teach to raise the standard of living of a person it is also to raise the standard of giving.

CONCLUSION
Zakat can be very vital in promoting and maintaining economic development and growth and at the same time encouraging better financial inclusion. In fact, the development of the zakat system can be seen as an initiative program to alleviate poverty and an alternative right of the less fortunate people upon the fortunate people in Islam. If this system is conducted properly and effectively based on the Sharia, it can create better social welfare among the Muslim society. BAZIS DKI Jakarta achieved only three aspects of the Maqasid Sharia while LZS achieved all of it comprehensively. Therefore, it is seen that the system needs some improvements and innovation programs to achieve the objectives of the Sharia.
Due to the nature of the research approach adopted, the small number of subjects which are only two Zakat bodies contribute very little to none in scientific generalization. Furthermore, this paper's dependency on these two institutions becomes the limitation to make a general conclusion regarding Zakat distribution activity as a whole. Further study and research have to be done to establish Maqasid Sharia as a Key Performance Indicator (KPI) to not only Zakat institution but to be used widely in any industry.


ASSESSMENT OF ECONOMIC SUSTAINABILITY OF AN ENTERPRISE

In a turbulent economy and increasing economic crises, the question of assessing the economic sustainability of a corporation is quite relevant and in demand in scientiﬁc research. At the same time, with a certain degree of conditionality, all works in this direction can be divided into two clusters: works based on traditional indicators of ﬁnancial stability and ones using original scientiﬁc approaches to determining the economic condition of an enterprise. This article belongs to the works of the second cluster. The basis for assessing the economic sustainability of an enterprise is the economic and mathematical modelling of the operating activities of the enterprise based on the well-known Cobb – Douglas production function. A methodology is developed for constructing a mathematical model of the enterprise’s activity, for determining elasticity indicators of output according to the resources used in the production process and elasticity of production, on the basis of the dynamics of which an approach to assessing economic stability is proposed. The methodology was tested on the data of PJSC Chelyabinsk Tube Rolling Plant during the implementation of the innovation project “Height 239”.

Introduction
In a turbulent economy and increasing economic crises, the question of assessing the economic stability of a corporation is quite relevant and in demand in scientific research [1][2][3][4][5]. At the same time, with a certain degree of conditionality, all works in this direction can be divided into two clusters: works based on traditional indicators of financial stability and ones using original scientific approaches to determining the economic condition of an enterprise. In this article, the assessment of the economic sustainability of an enterprise is based on mathematical modelling of the enterprise's operations based on a production function.

Research Methodology
To assess the economic sustainability of an enterprise, it is proposed to use the economic-mathematical model of the operating activity of the enterprise. The algorithm for constructing mathematical models of the enterprise's operations is based on the use of the production function where CP represents the commercial products, thousand rubles / year; N is the number of staff, people; F A is the volume of fixed assets, thousand rubles; CA is the current assets, thousand rubles / year; A is the empirically determined coefficient that provides conjugation of the dimension of the left and right sides of equation (1)  performs the role of a large-scale translation factor between all components of formula (1); α, β, γ are the elasticity coefficients of output according to the corresponding resource, dimensionless; e is base of the natural logarithm; λ is the coefficient of elasticity that shows the effect of "autonomous" technical progress on production results, dimensionless; t is the time normalized relative to the base year, years, In the most general form, the parameters A, α, β, γ of production function (1) are based on retrospective data on CP, N, F A, CA, t, as a solution to the system of linear equations where m is the number of years for which retrospective data are collected (m > 4).
Sometime system of equations (1) may not have a solution. In this case, there is a phenomenon that Mendershausen called the effect of multicollinearity between independent variables. To overcome this barrier, the following transformations must be made.
Divide the total differential of function (1) by the function itself and get Denote Then expression (3) takes the form Based on the transformed initial data from system of equations (5), we find the elasticity coefficients α, β, γ, λ.
According to the found numerical values of the elasticity coefficients, the coefficient A is as follows: The parameters of production function (1) found by the presented algorithm are an economic-mathematical model of the operating activity of the enterprise. Its reliability is checked analytically by assessing the deviations of the actual values of the exogenous indicator in the retrospective section from the corresponding theoretical values. Assessing can be carried out according to well-known criteria of agreement: Fisher, Student, Kolmogorov-Smirnov and others used to test statistical hypotheses in conventional approximation models.
The indicator calculated during the simulation h = α + β + γ called the elasticity of production. Its value shows how the scale of production affects output. If h = 1, then function (1) assumes a constant effect of growth in the scale of production. If h > 1, the increasing effect of growth in production scales prevails, i.e. in this production process there is an increasing return on production resources. If h < 1, a decreasing effect of growth in production scales is manifested, i.e. the company reduces the return of resources involved in production.
However, this indicator can be used to assess the economic sustainability of the enterprise. For this purpose, it is necessary to consider it in dynamics. If ∂h/∂t > 0, at t = 1, T , then there is economic stability of the enterprise, otherwise we talk about reducing the economic stability of the enterprise. The results of such an assessment can be used as KPI to stimulate top managers for the year. The methodology was tested on the data of PJSC Chelyabinsk Tube Rolling Plant during the implementation of the innovation project "Height 239".
We express our sincere gratitude to the Doctor of Economics, Professor Veniamin Gennadievich Mokhov, congratulate him on his seventieth birthday and wish him further scientific success.