BANKING FRAUD IN ISLAMIC BANKING GOVERNANCE: AN ISLAMIC LAW AND ECONOMIC ETHICS PERSPECTIVE FROM BPRS PURWODADI

Sakli Anggoro; Supriyadi Supriyadi; Lina Kushidayati

doi:10.33650/jhi.v10i3.15739

BANKING FRAUD IN ISLAMIC BANKING GOVERNANCE: AN ISLAMIC LAW AND ECONOMIC ETHICS PERSPECTIVE FROM BPRS PURWODADI

DOI: https://doi.org/10.33650/jhi.v10i3.15739

Authors

(1) * Sakli Anggoro

(Universitas Islam Negeri Sunan Kudus)
        Indonesia
(2)  Supriyadi Supriyadi   (Universitas Islam Negeri Sunan Kudus)
        Indonesia
(3)  Lina Kushidayati   (Universitas Islam Negeri Sunan Kudus)
        Indonesia
(*) Corresponding Author

Abstract

Banking fraud continues to challenge the governance of Islamic financial institutions despite the implementation of internal control, auditing, and risk management systems. Previous studies have predominantly examined fraud from procedural and compliance perspectives, with limited attention to the role of Islamic ethical values in fraud prevention. This study aims to examine how fraud is understood within Islamic banking governance and to develop a value-based fraud prevention framework. A qualitative case study was conducted at BPRS Purwodadi using in-depth interviews with seven key informants, supported by observation and document analysis. Data were analyzed using the interactive model of Miles, Huberman, and Saldaña. The findings indicate that participants understood fraud not only as a legal or procedural violation but also as a breach of institutional trust (amanah). Fraud was associated with organizational pressure, supervisory weaknesses, behavioral rationalization, and insufficient internalization of Islamic ethical values. These findings suggest that effective fraud prevention requires the integration of organizational control mechanisms, ethical internalization, and sharia governance. Based on these findings, the study proposes the Islamic Ethical Fraud Prevention Framework, which integrates structural control, ethical internalization, and sharia governance into a value-based approach to fraud prevention in Islamic banking. The framework contributes to the literature by providing an integrated perspective that combines governance mechanisms with Islamic legal and ethical principles.

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