The Future of Islamic Banking and Finance in Indonesia: Performance, Risk and Regulation

Romi A. Setiawan

Research output: Book/Research ReportAuthored Book

4 Citations (Scopus)

Abstract

Sharia compliance is the raison d’etre of Islamic banks. All of their instruments and activities should be based on sharia principles, which unfortunately exposes them to greater risks than their conventional counterparts, regulated under the dual banking system in Indonesia. These include inconsistencies between fatwas, unique reputational risks and ineffciencies in the regulatory framework governing Islamic banks. The Future of Islamic Banking and Finance in Indonesia: Performance, Risk and Regulation critically examines the less-studied issue of developing an Islamic banking regulatory and supervisory framework that considers the risk pressures faced by Islamic banks operations in an Indonesian financial sector dominated by conventional banks. The book assesses the extent to which the global financial standards of the Basel Accords have been followed by Islamic banks in Indonesia, with respect to their regulation, supervision and risk management, to highlight the unresolved tensions in the multiple regulatory and supervisory institutions. The book proposes a middle-ground approach that accommodates modification of the existing financial regulatory and supervisory system in line with international best practice. The reforms proposed in this book offer a way for financial regulatory and supervisory agencies to further develop modern Islamic law and finance. The book will be a valuable resource for scholars and policymakers interested in the dual banking system in Indonesia.

Original languageEnglish
Place of PublicationU.K.
PublisherRoutledge
Number of pages199
ISBN (Print)9781032494715
DOIs
Publication statusPublished - 1 Jan 2023

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