COMPARATIVE STUDY OF ISLAMIC BANKING SUPERVISION REGULATION IN INDONESIA AND MALAYSIA

Abstract

This study compares the supervisory regulations of Islamic banks in Indonesia and Malaysia, which are supervised by the Financial Services Authority (OJK) and Bank Negara Malaysia (BNM) respectively. Despite the importance of Islamic banking to the economies of both countries, the supervisory techniques used by OJK and BNM are very different. This study utilizes a comparative research approach to examine the similarities and differences between the supervisory regulations imposed by the two institutions. The findings show that OJK in Indonesia prioritizes institutional development and Shariah compliance with a focus on risk management, whereas BNM in Malaysia integrates Shariah principles with financial risk management in a more holistic way and supports Islamic financial product innovation. In regulatory effectiveness research, BNM's strategy is more effective in promoting Islamic banking growth and stability compared to OJK, which continues to face issues in regulatory harmonization and product innovation. These findings shed light on how to improve the quality of Islamic banking supervision in both countries, as well as the implications for policy development.