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The Role Of Deposit Insurance In Supporting Islamic Microfinance Institutions:Insights From Indonesia

Author

Listed:
  • Bayu Arie Fianto

    (Universitas Airlangga, Indonesia)

  • Bagus Aryo

    (Universitas Indonesia, Indonesia)

  • Syed Alamdar Ali Shah

    (A Chartered University, Pakistan)

  • Muhammad Ubaidillah Al Mustofa

    (Institut Teknologi Sepuluh Nopember, Indonesia)

  • Ade Intan Ismi Nur Anisha

    (Birmingham Business School, United Kingdom)

  • Rafiatul Adlin Hj Mohd Ruslan

    (Universiti Teknologi MARA, Malaysia)

Abstract

This study assesses the necessity of a Deposit Insurance System (DIS) for Islamic Microfinance Institutions (IMFIs). It first identifies key factors influencing knowledge of DIS among stakeholders and then proceeds to evaluate the social impact of IMFIs and examine the urgency for a DIS and respondents’ willingness to pay deposit insurance premiums. Conducting survey using purposive sampling, we obtain required data for the analysis from 405 respondents. Applying the logistic regressions, we find reveal that education, work experience, and financial behaviors influence DIS awareness. The findings underscore the urgency of implementing DIS to bolster stakeholder trust and financial system stability, with respondents expressing willingness to contribute premiums. These insights contribute to designing a Shariah-compliant DIS that aligns with the unique operational characteristics of IMFIs, supports sustainable industrialization, and advances SDG-9 goals. The study highlights actionable pathways for policymakers, regulatory bodies, and IMFI managers to foster a resilient and inclusive financial ecosystem.

Suggested Citation

  • Bayu Arie Fianto & Bagus Aryo & Syed Alamdar Ali Shah & Muhammad Ubaidillah Al Mustofa & Ade Intan Ismi Nur Anisha & Rafiatul Adlin Hj Mohd Ruslan, 2025. "The Role Of Deposit Insurance In Supporting Islamic Microfinance Institutions:Insights From Indonesia," Journal of Islamic Monetary Economics and Finance, Bank Indonesia, vol. 11(1), pages 7-34, March.
    • Handle: RePEc:idn:jimfjn:v:11:y:2025:i:1b:p:7-34
    DOI: https://doi.org/10.21098/jimf.v11i1.2476
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    More about this item

    Keywords

    Islamic microfinance; Deposit insurance; Economic growth; SDG-9; Indonesia;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • P43 - Political Economy and Comparative Economic Systems - - Other Economic Systems - - - Finance; Public Finance
    • Q14 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Finance

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