Integration of Islamic Social Finance and Commercial Finance to Support Indonesia's Sustainable Development

Abstract

The purpose of this study is to identify a model of integration between Islamic Social Financial Institutions and Islamic Banks as Commercial Financial Institutions. The integration under consideration is risk management from Islamic Bank financing via the advantages that are organically owned by Islamic Social Finance. The achievement of the ideal model in this research will promote inclusive access to Islamic banking for small debtors. The exploratory descriptive method was employed in this study. The descriptive method was used in this study to systematically describe the hybridization model of Islamic Social Financial Institutions into Islamic Bank risk management. While the exploratory method is used to study, discover, and comprehend the integration process of Islamic social financial institutions in mitigating the risk of financing Islamic banks. The authorities must take several regulatory steps to hybridize Islamic banking financial institutions and Islamic social financial institutions. First, improve the Islamic banking philosophy. Profit-sharing financing Second, enact a separate profit-sharing financing regulation. The authority must issue regulations regarding affirmative action for profit-sharing financing, such as the capital structure of banks and Islamic financial institutions, the Profit Sharing Financing Asset Rating System, issuing rules regarding Rating Agencies (LR), establishing Profit Sharing Financing Guarantee Institutions (LPP-Profit Sharing), and establishing zakat instruments as one of the assessments of bank health. The findings of this study can serve as a model for future researchers and policymakers interested in investigating operational aspects of the integration of social and commercial finance within the context of an inclusive financial strategy.