Impact of Islamic Charity and Qarz-al-Hassane Institutions on Poverty Reduction in Iran

There are two ways to spend money in the way of Allah and spend on paying the debt. One of the main goals of charity in religion after the creation of man is the reduction of poverty in clothing. The purpose of this paper, based on existing theories on Islamic economics and poverty alleviation, is to assess the impact of charity and social security payments on poverty reduction. Based on this model, this model designed with provincial data (including 27 provinces) during the period 1383-1393 by panel data and using the Eviews 9. The results of the survey show that charity and borrowing are among the factors that reduce poverty. The coefficient of effect of charity on the poverty index in the provinces of the country is -2.8%, which is based on the one percent increase in the charity, with the stability of other conditions and factors, poverty decreases by 2.08%. This suggests that for one percent increase in loan facilities in the provinces of the country, with another stable condition, poverty reduced by 4.2%. The results of model estimation and reports confirm the existence of a negative and significant relation between the second interruption of government development expenditures and poverty indicators in different provinces of the country. Also the coefficients, the effect of current government spending and inflation on the poverty variable are negative, but not significant.