The Development of Islamic Capital Market Regulation in Indonesia: A Sociology of Law Perspective

Abstract

This study examines the development of Indonesia’s Islamic capital market regulation from 1997 to the 2026–2030 Sustainable Capital Market Roadmap era. Existing studies tend to narrate this history in a normative-chronological manner, listing regulations year by year without analysing how law and society actually shape one another. This article addresses that gap by reading the regulation as an object of legal-sociological periodisation. Using a qualitative normative-juridical approach combined with legal-sociological analysis, the study proceeds in two stages: historical periodisation and sociological analysis. Data were gathered through library research on primary legal materials (Law No. 8 of 1995, OJK regulations, and DSN-MUI fatwas), secondary legal materials (national journal articles), and tertiary legal materials. Four theoretical frameworks are operationalised with distinct functions: Ehrlich’s living law to detect law lag, Pound’s law as social engineering to detect proactive regulation, the Nonet–Selznick typology to classify legal orders, and Soekanto’s five factors of legal effectiveness as the evaluative instrument. The study finds that Indonesia’s Islamic capital market regulation has moved through four configurations: living law, negotiated legitimation, social engineering, and global legal pluralism. In the embryonic phase, society preceded the state; in the formalisation phase, law emerged from institutional bargaining between DSN-MUI and Bapepam; in the expansion phase, law led the market; and in the current phase, national religious authority confronts global Sharia standards such as AAOIFI. Of Soekanto’s five factors, legal culture emerges as the most prominent, since compliance in Indonesia arises from internal conviction rather than legal sanction. These findings offer a sociologically grounded basis for policy recommendations