Work

Reconstructing Islamic Agricultural Financing Regulations: A Socio-Legal Study using Soft Systems Methodology

Year: 2026

Type: article

Abstract: Despite its constitutional role in supporting food sovereignty, Banyuwangi’s agricultural sector remains excluded from formal Islamic finance due to a regulatory gap between rigid banking standards and agricultural risk. This study identifies a Proximity Paradox, in which Islamic banks are structurally disincentivized from financing smallholders. Using Soft Systems Methodology (SSM) as a socio legal approach and drawing on empirical data from farmers, Islamic banks, and Bayt al-Māl wa al-Tamwīl (BMTs), the research formulates an Agricultural Financing Regulatory Model. The model recommends policy reform by the Financial Services Authority (Otoritas Jasa Keuangan, OJK) and the National Sharia Council (Dewan Syariah Nasional–Majelis Ulama Indonesia, DSN-MUI), including hybrid value chain contracts, mandatory agricultural takaful, and a formal Bank–BMT linkage scheme, to align banking compliance with agricultural realities and promote distributive justice (‘adl).

Source: Fiat Justisia Jurnal Ilmu Hukum

DOI: 10.25041/fiatjustisia.v20no1.4722

Authors: Ahmad Muqorobin, Use Etica, Nunung Rodliyah, Akmal Hidayah, Mohamed Rashid Ab Razak

Institutions: University of Darussalam Gontor, Lampung University, International Islamic University Malaysia

Language: English

Topic: Islamic Finance and Banking Studies

Subfield: Accounting

Field: Business, Management and Accounting

Domain: Social Sciences

SDGs: Peace, justice, and strong institutions, Zero hunger

Open Access status: diamond

OpenAlex ID: W7130503196

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