توسعه، تغییر اجتماعی و امور مالی اسلامی در اندونزی معاصر

The global spread of Islamic finance has transformed the financial systems of many Muslim countries, but analysts know little about the factors that shape individuals’ demand for Islamic finance. This paper examines the socioeconomic origins of consumer demand for Islamic financial products, using original survey data from Indonesia, where a growing Islamic financial market coexists with a large conventional financial system. Modernization and globalization play critical roles in shaping individual use of Islamic financial products. Perhaps surprisingly, there is no evidence that Islamic piety has any systematic effect on consumers’ choice of Islamic versus conventional financial products.

The global spread of Islamic finance has transformed the financial systems of Muslim countries. Despite an abundance of theoretical research on how Islamic finance operates (Aggarwal and Yousef, 2000, El-Gamal, 2006, Henry and Wilson, 2004, Kuran, 2004, Visser, 2009 and Warde, 2000), and a growing number of studies of Islamic financial institutions in various national contexts (Ariff, 1988, Khan and Mirakhor, 1990, Moore, 1990, Venardos, 2006 and Wilson, 2009), we know little about Islamic finance from the perspective of ordinary Muslims who might choose to use it. Traditionally, analysts have argued that pious Muslims are the primary users of Islamic financial products. Almost mechanically, the existence of a group of pious Muslims indicates a demand for Islamic banking products. In addition to the many industry studies that propose that pious Muslims are a large and untapped market segment, the marketing literature on bank choice has identified religious motivations as uniting consumers of Islamic financial products (see Gait & Worthington, 2008 for a review). Scholars rarely articulate the logic behind these findings, but implicitly it is one of Islamic orthopraxy: the choice of Islamic financial products signifies that a pious Muslim has internalized proper Islamic guidelines for behavior in various aspects of everyday life not directly tied to religious belief and practice. An alternative is to approach Islamic finance as a phenomenon embedded within wider processes of development social change in the Muslim world. This approach draws on social scientists’ research on the particular social contexts in which Islamic finance has grown in the past three decades. It is possible, in this vein, to recast consumers’ views of Islamic finance in terms that are amenable to a more economic or sociological analysis, viewing the rise of Islamic banking as an instance of a more general process through which individuals claim or maintain a Muslim identity. Conceived this way, the choice of whether or not to use Islamic financial products is an indication of something deeper than expressed piety, and may in fact reflect the ways in which individuals respond to broader social, economic, and political changes. Two transformations have occurred in the Muslim world in the past decade—each occurring alongside the rise of Islamic orthopraxy—that suggest different perspectives on consumers’ use of Islamic banks than does the literature on bank marketing. The first transformation is the rise of a Muslim middle class (see e.g. Clarke, 2004, Nasr, 2009 and Tanter and Young, 1990). Middle- and upper-class Muslims face distinct challenges of identity maintenance. On one hand, they have resources for consumption that set them apart from the poor and working classes. At the same time these same individuals face problems of social dislocation that are a product of the very processes of modernization that transformed their class status.1 A common finding is that such feelings of social dislocation increase individuals’ propensity to identify with Islam in their behavior, lifestyle, consumption choices, and political attitudes—many of which are more salient issue areas for members of the middle and upper classes than they are for the poor and working classes. For Khoury (1983, p. 251), “Islamic revivalism” in politics and social life is a central response to modernization by “classes that in recent years have been drawn into the modernization process but have not been assimilated by it.” Because the distinctive feature of middle- and upper-class Muslims is their ability to consume, we should observe this process of identity maintenance in their consumption patterns. This class-based approach suggests that middle- and upper-class Muslims should be the primary users of Islamic financial products. This is not simply because they are wealthy enough to diversify their investments toward Islamic financial products (assuming such products, being new, are more risky), but rather because they view such practices as preserving a particular Muslim identity in the face of various social changes inherent to modernization. The second transformation of the Muslim world is the consequence of globalization and the transformation of Muslim identity (Keyman and Koyuncu, 2005, Khoo and Hadiz, 2010, Mandaville, 2001, Meuleman, 2000 and Roy, 2004). Globalization in these accounts has transformed Muslim identity by changing individuals’ terms of reference from the national or local community to the global or transnational community. Much like modernization and class formation, globalization can lead to the same kind of social dislocation that increases individual ties to a “deeper” or “enduring” religious identity. But globalization also increases the salience of the Muslim identity by linking it to a broader transnational religious community. Not all Muslims will respond to globalization in this way—it is just as possible that globalization will increase the salience of one’s identity as a member of other global or transnational communities—but among those who do, the consequences should be visible in everyday life choices. Such internationalist approaches suggest that Muslims who identify with the global Muslim political community should be more likely to use Islamic financial products because doing so is one way to express one’s identification with that community. These arguments about the origins of social change in the Muslim world do not directly compete with one another, although they differ in how they conceptualize contemporary social change—as driven by Islamization and religious change, by modernization and class formation, or by globalization and identity change. However, when applied to the particular problem of Islamic finance, none of these approaches is based on systematic empirical research. Strikingly, we do not even know if more pious Muslims are more likely to use Islamic financial products than are less pious Muslims, as per the conventional conclusions from the marketing literature. Most such studies of Islamic banking suffer from basic problems of selection bias, for almost without exception these studies focus only on consumers of Islamic banking products (e.g. Asyraf and Nurdianawati, 2007 and Metawa and Almossawi, 1998). Other individual-level research focuses only on consumers’ awareness of Islamic financial products (e.g. Naser, Jamal, & Al-Khatib, 2003), or on a limited number of banks within a country (e.g. Hegazy, 1993). Without even a basic grasp of the relationship between piety and the use of Islamic financial products, it is impossible to weigh the influence of piety versus alternative determinants of individuals’ choice of Islamic versus conventional banking products. Rather than starting with the customers of Islamic banks and determining what characteristics they share, this paper starts with all potential consumers and investigating the factors that separate those who use Islamic financial products from those who do not. The result is the first comprehensive study of the individual-level determinants of the use of Islamic financial products in a majority-Muslim country, using data from an original, nationally-representative survey in Indonesia—which has both a large conventional banking industry and a large and growing Islamic financial industry. There is robust evidence supporting the class and internationalist approaches to the sources of demand for Islamic financial products: the frequency with which Indonesian Muslims report using Islamic financial products increases both as a function of family income and of respondents’ views of the importance of establishing strong political ties with Saudi Arabia. In sharp contrast with the existing empirical literature—including the only existing study of consumer attitudes toward Islamic banks in Indonesia (Abduh & Omar, 2007)—there is no evidence that Islamic piety is even a partial determinant of the use of Islamic financial products in Indonesia. These findings cannot be explained by differential access to Islamic financial products among different segments of the Indonesian Muslim population, nor can they be explained simply by the ability of wealthier Indonesians to diversify their holdings across different kinds of financial products. In the next section I provide a brief overview of Islamic finance in order to establish that for most consumers, there is little that distinguishes Islamic products from conventional ones aside from the label applied to them. In Section 3 I turn to the Indonesian case, describing the context of Islamic banking in that country, the data, and my empirical strategy. Empirical results appear in Section 4. Section 5 concludes with a discussion of the implications of these findings for the broader literatures on globalization, modernization, and identity change in the Muslim world; the literature on Islamic banking; and the narrower marketing literature on Islamic banks and bank choice.

The rise of Islamic finance is part of a larger phenomenon of a global Muslim renewal that has occurred over recent decades. Mainstream development scholars are today beginning to take seriously the important changes in national financial systems that have been brought about through the rise of Islamic finance. Theoretical studies of Islamic finance have demonstrated the ways in which contract forms deemed theologically permissible to Muslim scholars can be applied to modern financial practices. Likewise, studies of Islamic financial systems have charted the historical origins of modern Islamic finance, described how Islamic finance works in practice, and identified the ways in which various national systems differ from one another. Almost entirely omitted from this literature is the focused study of what determines individual demand for Islamic financial products. This paper begins to fill this gap in the literature. Considering the use of Islamic financial products as a claim about identity rather than merely a consequence of one’s piety or religiosity encourages analysts to look beyond religion to other factors that may influence individuals’ strategies for identity maintenance. Focusing on Indonesia—where conventional and Islamic financial systems coexist, where expressed piety is on the rise, and where Muslims face the social changes inherent in modernization and globalization—we discover that piety is far less important as a factor in shaping individuals’ use of Islamic financial products than commonly believed. Instead, modernization and globalization play decisive roles in shaping individual use of Islamic financial products. The picture that these empirical results paint is static, focusing on a snapshot of contemporary Indonesia rather than on the processes through which class formation and global identity formation promote the use of Islamic financial products. But the cross-sectional variation that identified here among Indonesian with regard to their individual use of Islamic financial products is informative, and is consistent with the view that modernization and globalization rather than religious change itself are the factors driving the rise of Islamic finance. These findings give new context to research on development, social change, and identity in the Muslim world by exploring an important but understudied component of Muslims’ daily lives. Far from being irrelevant or inconsequential due the fact that it so closely parallels conventional finance, Islamic finance is a uniquely powerful symbol of identity politics in the Muslim world precisely because it is so nearly indistinguishable from conventional finance. The choice of Islamic financial products—at least in plural banking systems such as those found in Indonesia—is therefore a window into the ways in which social and economic changes are filtered through religion to yield concrete changes in the lives for millions of Muslims. These findings are also a window into a set of questions that the literature on Islamic finance has only begun to ask, and are an interesting parallel to existing research on the origins of Islamic economics and Islamic finance, which Kuran (2004) has argued lie in a set of social, political, and economic changes that began in the 1930s in the Indian subcontinent and received critical support as a consequence of the oil boom of 1970s. Much as the origins of Islamic financial institutions—the supply of Islamic finance—begin with modernization and globalization, these findings suggest that the use of Islamic financial institutions—the demand for Islamic finance—can be tied to analogous processes at work today. One cautionary note is in order for scholars of Islamic finance in other national contexts. Indonesians’ approach to Islamic finance may not be representative of all Muslims due to differences in Islamic jurisprudence across Sunni Muslim communities. Indonesian Muslims overwhelmingly follow the Shafi’i “school” (madhhab) of Islamic jurisprudence, which is predominant in Southeast Asia, East Africa, and parts of Egypt and the southern Arabian Peninsula (see Abdal-Haqq, 2002, pp. 67–74 for information on the various schools of Sunni jurisprudence). The jurisprudential traditions differ in the extent to which they accept various contract forms. Venardos (2006, p. 89), for example, argues that the Hanafi school—predominant in Turkey and Pakistan, among other countries—is far less permissive on financial transactions than the Shafi’i school. What may be considered a theologically impermissible financial arrangement by a pious Pakistani Muslim may be considered wholly Islamic by a pious Indonesian Muslim. If so, this necessitates care in generalizing about piety and banking choice to countries where other schools of Islamic jurisprudence place restrictions on the types of financial products that may be labeled Islamic. This cautionary note notwithstanding, the implications of this research for the literature on bank choice are both methodological and theoretical. Methodologically, these findings demonstrate the dangers of selection bias—starting with all consumers and then determining what characteristics they share makes it impossible to differentiate between users and nonusers. This makes it difficult to discover the factors that are common to just Islamic bank users in particular rather than those factors that are common to all Muslims, the latter being much less interesting to bankers and marketing scholars than the former. Theoretically, these findings also suggest that there are unappreciated socioeconomic and even political factors that shape individual bank choice. Fuller appreciation of these “nonbank” drivers of bank choice yields important insights into consumer demand for Islamic financial products.