Critical Tensions in Indonesian Sharia Financial Regulation: Institutional Fragmentation, Delegated Authority, and the Regulatory

Budi Budi

Abstract


Indonesia’s Sharia financial regulatory architecture relies heavily on the normative authority of fatwas, especially those produced by the Dewan Syariah Nasional-Majelis Ulama Indonesia (DSN-MUI), to legitimize and orient Islamic financial products. Over time this delegated model created strong doctrinal coherence and market legitimacy; yet it has also produced critical governance tensions. This paper examines three interlocking problems: (1) institutional fragmentation across state regulators, religious authorities, and industry bodies; (2) the political and procedural limits of delegated fatwa authority when transformed into de-facto regulatory gatekeeping; and (3) technological and temporal mismatches that expose DSN-MUI’s deliberative issuance processes to fintech acceleration. Using systematic library research and regulatory governance theory, the study argues that Indonesia’s fatwa-dependent governance achieves legitimacy but not always enforceability or agility. Reform should focus on building interoperable compliance architectures, clarifying delegation boundaries, and developing translation mechanisms (RegTech/semantic taxonomies) so fatwas can guide but not inadvertently bottleneck innovation, consumer protection, or regulatory accountability.

Keywords


Fatwa; Regulation; DSN-MUI; Interoperability.

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References


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DOI: https://doi.org/10.15548/ijt.v41i2.906

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