Reconstructing Islamic agricultural financing regulations: A socio-legal study using soft systems methodology

Moqorobin, Ahmad and Yus, Etica and Rodliyah, Nunung and Hidayah, Akmal and Ab Razak, Mohamed Rashid (2026) Reconstructing Islamic agricultural financing regulations: A socio-legal study using soft systems methodology. Fiat Justisia: Jurnal Ilmu Hukum, 20 (1). pp. 47-68. ISSN 1978-5186 E-ISSN 2477-6328

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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).

Item Type:	Article (Journal)
Uncontrolled Keywords:	Islamic Banking Regulation; Socio-Legal Analysis; Proximity Paradox; Institutional Linkage; Agricultural Takaful
Subjects:	H Social Sciences > HG Finance > HG3368 Islamic Banking and Finance K Law > KBP Islamic Law
Kulliyyahs/Centres/Divisions/Institutes (Can select more than one option. Press CONTROL button):	Ahmad Ibrahim Kulliyyah of Laws Ahmad Ibrahim Kulliyyah of Laws > Department of Legal Practice
Depositing User:	MOHAMED RASHID AB RAZAK
Date Deposited:	16 Mar 2026 08:44
Last Modified:	16 Mar 2026 08:44
Queue Number:	2026-03-Q2582
URI:	http://irep.iium.edu.my/id/eprint/127966

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