Regulatory Compliance And Experiences Of Islamic Cooperatives In Competitive Business In Indonesia

Purpose: The paper aims to analyze the compliant level of Islamic cooperative to related regulations. In addition, it proposes to explain how Islamic cooperative can compete in a difficult business environment. It has unique model of Islamic financial institution which aims to help poor people to avoid conventional banking system.
Design/methodology/approach: The paper is based on purposive sampling and reliable data objects. 14 samples from 34 are taken from Islamic cooperative available. The data are on primary obtained by interview and questionnaires. The questionnaire is based on compliance check on stated regulations with additional information, likert scale, and essay format. Basically, Islamic cooperative is strengthened by Ministerial Regulation issuance in 2004, followed by its monitoring and supervision regulation in 2007.
Findings: The paper provides empirical insights about Islamic cooperative may not be complied due to unclear accountability and procedure. Besides, this institution must compete to other established conventional financial institutions.
Research limitations/implications: Sample is only limited in Depok city, West Java, there should be random sample spread out of all Indonesia region to get finding conclusions in general.
Practical implications: Only Islamic cooperative whose has an effective strategy and captive market can survive from this competitive business. Some important factors must be fulfilled in order to develop and to exist in tough business environment.
Originality/value: This paper may be the first paper which discusses the compliance issue with related regulations and their business strategy to survive and to face problems in Indonesia.