Islamic crowdfunding and Shariah compliance regulation: problems and oversight
ISSN: 1359-0790
Article publication date: 24 October 2023
Issue publication date: 4 June 2024
Abstract
Purpose
This study aims to identify the problems in shariah compliance and the weak oversight of implementing Islamic crowdfunding (ICF). Shariah compliance regulation is an essential subsystem in Islamic social finance ecosystems.
Design/methodology/approach
This type of research is legal research. The research approaches are the statute, comparative and conceptual approaches. The study in this research examines Indonesia, the UK and Malaysia.
Findings
ICF is one of the fastest-growing sectors of Islamic financial technology (fintech). The Islamic fintech sector is showing maturity signals with a market size of $79bn in 2021, projected at $179bn in 2026. Malaysia, Saudi Arabia and Indonesia lead the Index by Global Islamic Fintech (GIFT) Index scores. However, low shariah compliance is still an issue in implementing ICF. This problem is caused by regulatory support that is still lacking and oversight of shariah compliance is not optimal. On the one hand, shariah compliance is the ICF core principle for Shariah Governance.
Research limitations/implications
This study examines the regulation and oversight of ICF in Indonesia, Malaysia and the UK. Indonesia and Malaysia, a country with the highest GIFT index score in the world, and the UK, a country with an Islamic finance sector experiencing rapid growth.
Practical implications
The research results on shariah compliance regulation in ICF are helpful as a comprehensive approach for developing sustainable Islamic social finance ecosystems.
Social implications
Shariah compliance is the core principle of ICF governance. Its implementation can increase public trust.
Originality/value
Crowdfunding platform and issuers in ICF must implement shariah compliance. Therefore, it is essential to consider the presence of shariah compliance requirements and a Shariah Supervisory Board (DPS).
Keywords
Citation
Sudarwanto, A.S., Kharisma, D.B. and Cahyaningsih, D.T. (2024), "Islamic crowdfunding and Shariah compliance regulation: problems and oversight", Journal of Financial Crime, Vol. 31 No. 4, pp. 1022-1036. https://doi.org/10.1108/JFC-01-2023-0003
Publisher
:Emerald Publishing Limited
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