The Role of Sharia Regulations in Preventing Systemic Crises in the Islamic Banking Sector in Indonesia

Abstract

Penelitian This study aimsto analyze the role of Sharia regulations in preventing systemic crises inthe Sharia banking sector in Indonesia. The method used is a SystematicLiterature Review, with literature sources obtained from the Google Scholar, DOAJ, and Scopus databases, and limited to publications from2016 to 2026. The literature selection process was conducted systematically based oninclusion and exclusion criteria to ensure the relevance and quality of the sources analyzed. The results of the study indicate that Sharia regulation inIndonesia has established a relatively comprehensive framework for maintainingfinancial system stability and mitigating systemic risk through the integrationof Sharia principles, governance, and institutional oversight bythe Financial Services Authority and Bank Indonesia, reinforced by fatwas from the National Sharia Council. These regulations promote ethical financial practices, reduce speculation, and strengthen risk distribution through mechanisms based on real assets and profit-sharing. However, the effectiveness of regulatory implementation still faces various challenges, including inconsistencies in the application of Sharia principles, limitations in human resource quality, and suboptimal coordination among supervisory agencies, particularly in addressing the dynamics of digital financial innovation. This study contributes to enriching the literature on Sharia regulation and financial stability, and recommends the need to strengthen regulatory harmonization, enhance human resource capacity, and integrate technology into the supervisory system to improve the effectiveness of systemic crisis prevention in the future.