Islamic Banking and Islamic Accounting in Indonesia: History and Recent Development

Mahfud Sholihin and Dian Andari

A chapter in Banking and Accounting Issues from IntechOpen

Abstract: Islamic banks (IBs) have distinctive characteristics compared with the conventional ones. IBs only perform permissible (halal) financial transactions viewed from Islamic perspective and avoid usury (riba) and overspeculation (gharar). Consequently, IBs require special accounting to accommodate their nature. In terms of accounting, Indonesia is unique, as it has two accounting (for business organizations) standard setters: Financial Accounting Standard Board (Dewan Standar Akuntansi Keuangan-DSAK) and Sharia Financial Accounting Standard Board (Dewan Standar Akuntansi Keuangan Syariah-DSAS). This chapter discusses the development of IBs in Indonesia, a country with majority of its citizens being Muslim. Further, it explains the development of Islamic Financial Accounting Standards (IFAS) including how the standards are developed (the due processes). Finally, this chapter describes whether Islamic financial accounting standards developed in Indonesia has sufficiently fulfilled the accounting standards needed by Islamic banks in Indonesia.

Keywords: Dewan Standar Akuntansi Syariah (DSAS); Institute of Indonesia Chartered Accountants (IAI); Indonesia; Islamic accounting; Islamic banking (search for similar items in EconPapers)
JEL-codes: M41 (search for similar items in EconPapers)
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Persistent link: https://EconPapers.repec.org/RePEc:ito:pchaps:258039

DOI: 10.5772/intechopen.103654

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