The Future of Islamic Banking and Finance in Indonesia
Performance, Risk and Regulation
- Available for pre-order on June 28, 2023. Item will ship after July 19, 2023
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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 inefficiencies in the regulatory framework governing Islamic banks.
This book 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.
Table of Contents
1. Introduction 2. Sources of Islamic Law in Indonesia 3. The Regulation of the Banking System in Indonesia 4. Islamic Banking Regulation and Supervision 5. Islamic Financial Instruments in Indonesia 6. Islamic Derivatives in Indonesia: Debate and Legal Challenges 7. Implementation of Basel Accords and Implications for Islamic Banking 8. Risk and Risk Management in Islamic Banking 9. Reform Proposals, Further Research, and Conclusion
Romi Adetio Setiawan is a Lecturer of Islamic Banking and Finance Law at the State Islamic University of Bengkulu, Indonesia.