Strengthening Financial Resilience through Shariah-Compliant Deposit Insurance Systems for Islamic Microfinance Institutions: Empirical Evidence from Indonesia
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Abstract
The present study examines the necessity of establishing a Deposit Insurance System (DIS) specifically designed for Islamic Microfinance Institutions (IMFIs) operating in Indonesia. The investigation is structured around three principal objectives. The first objective seeks to determine the key factors that shape stakeholders' level of knowledge regarding DIS. The second objective evaluates the perceived social contribution of IMFIs within the framework of sustainable development, with particular reference to financial inclusion, poverty alleviation, and community empowerment goals aligned with the UN Sustainable Development Goals. The third objective assesses the urgency of adopting an Islamic deposit insurance mechanism alongside stakeholders' readiness to contribute insurance premiums. Using a purposive-convenience sequential sampling strategy, primary data were collected from 405 respondents representing four distinct stakeholder groups. Three binary logistic regression models were applied to analyse the data. The analytical findings demonstrate that educational attainment, professional work experience, and individual financial behaviour are significant determinants of DIS awareness among respondents. Furthermore, the results underscore the substantial urgency of implementing a DIS to reinforce stakeholder trust and promote broader financial system stability. Notably, a considerable proportion of respondents expressed genuine willingness to contribute deposit insurance premiums. These findings carry meaningful implications for the design of a Shariah-compliant DIS that is responsive to the distinctive operational characteristics of IMFIs, contributes to sustainable development, and supports financial inclusion objectives. The study offers concrete and actionable pathways for policymakers, regulatory bodies, and IMFI management to foster a more resilient and inclusive financial ecosystem in Indonesia.
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