Impact of Islamic Jurisprudential on Traditional Financial Customs and Legal Integration in Indonesia

Abstract

The current research presented an insightful analysis of the dynamic relationship between Islamic Jurisprudence and customary financial practices within the jurisdiction of Indonesia. The objective of this study was to investigate the extent to which the broader Indonesian society embraces Sharī‘a-compliant customary practices; subsequently, being acknowledged within the secular legal framework. This exploration was particularly pertinent due to Indonesia's nuanced approach to Islamic law integration, as it neither fully adopted nor entirely dismissed Sharī‘a principles. This study deployed a standard doctrinal approach, which involves a meticulous examination of legislative provisions and a thorough examination of practical cases, involving indigenous financial customs, such as ijon, tebasan, sewa and gadai. By doing so, this research seeks to ascertain whether the influence of Sharī‘a on customary practices can harmoniously coexist within the Indonesian legal system. The findings of this study challenged the traditional notions of legal centralism, emphasizing the importance of integrating local religious traditions into the state legal system. In particular, the study argued that Sharī‘a-endorsed commercial practices can independently occur alongside traditional practices in society, even in the absence of explicit Sharī‘a principles or interest-based restrictions. This study significantly contributed to our understanding of legal pluralism within Indonesian context and introduced a novel approach that acknowledged the interplay between Sharī‘a and Secular law, while fostering social cohesion and legal harmony.