Volume V: Economy, Politics, and Environmental Governance

Fatwa as Quasi-Regulation: The Role of DSN-MUI in Governing Hybrid Contracts in Indonesia’s Islamic Finance Industry

  • Azhar Muttaqin Universitas Muhammadiyah Malang dan UIN Sunan Gunung Djati Bandung, Indonesia

Keywords

DSN-MUI Fatwa; Quasi-Regulation; Hybrid Contracts; Sharia Governance; Islamic Finance.

Abstract

This article examines how DSN-MUI fatwas operate as a form of quasi-regulation in the governance of hybrid contracts within Indonesia's Islamic finance industry. Hybrid contracts matter because modern products can rarely be built on a single contract, often binding sale, agency, lease, partnership, pledge, and service into one structure. The more intricate the structure, the greater the need for governance that keeps innovation within sharia boundaries. Using a qualitative socio-legal approach with content analysis of DSN-MUI fatwas, OJK regulations, the MUI fatwa guidelines, international sharia governance standards, and academic literature, the study finds that fatwas work through four mechanisms: standardizing contract structures, granting sharia legitimacy to products, mitigating sharia risk, and entering institutional governance through the Sharia Supervisory Board, product review, SOPs, and sharia audit. The article argues that although fatwas are not identical to state law, they hold real regulatory authority because regulators reference them, institutions rely on them, and supervisors treat them as a basis for oversight. Its main contribution is a Fatwa-Based Governance Framework for Hybrid Contracts spanning normative, regulatory, operational, and substantive dimensions.

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