An institutional analysis of the emergence and institutionalisation of Islamic banking practices in Indonesia

Abstract

Purpose The purpose of this paper is to explore the purposeful actions of key actors who corroborated the emergence and institutionalisation of Islamic banking practices in Indonesia. Design/methodology/approach A documentary analysis approach is used in the paper, with the analysis being guided by insights from institutional work perspectives. Findings The emergence and institutionalisation of Islamic banking practices were influenced significantly by the changing dynamics of the institutional field and the social and political context in Indonesia, especially the Islamic revival in the 1980s and later on the political accommodation of Islam. These were then leveraged by various key actors through their institutional works. These actors, with their own specific roles, worked independently and later on together to establish Islamic banking practices in Indonesia. The findings also show the shifting priorities of the actors from compliance with religious edicts to promoting avenues for Muslim participation in economic activities. Research limitations/implications This paper is mainly based on documentary data; hence, the findings would be richer with primary data. Originality/value This research provides further understanding of how the Islamic banking idea can be pursued through the specific work of certain actors.