Economic Analysis of Waqf and Agency Theory: A Theoretical Review

This article explores the agency relationship, a central concept in agency theory, which arises when a principal delegates authority and responsibilities to an agent, characterized by information asymmetry and conflicts of interest. Applying this theoretical framework to Waqf, a traditional socio-economic system prevalent in many communities, the study aims to understand the governance mechanisms and dynamics between key stakeholders: donors (Waqif), managers (Nadhers), and beneficiaries. By analyzing their behaviors, incentives, and constraints, this research highlights the importance of governance mechanisms in resolving agency problems within Waqf institutions.