Digital Innovation and Green Economy: Synergy For Sustainable Islamic Finance in Southeast Asia

Abstract

This study investigates the synergy between digital innovation and the green economy in enhancing the sustainability of Islamic finance in Southeast Asia, emphasizing the interaction between technological advancement and environmental responsibility within Shariah-compliant financial systems. Using a qualitative comparative method with a multiple case study design, the research focuses on Indonesia, Malaysia, Brunei Darussalam, and Singapore. Data were obtained through semi-structured interviews, documentation, and content analysis of institutional reports from OJK, Bank Negara Malaysia, and international organizations such as IFSB, UNDP, and the World Bank, complemented by academic publications from 2020–2025. Informants included regulators, Islamic finance practitioners, and academics selected through purposive and snowball sampling techniques. Thematic analysis following the Miles and Huberman model revealed three key themes: the rapid digital transformation of Islamic finance, the growth of green financial instruments such as green sukuk and ESG funds, and the emerging digital–green synergy through blockchain-based carbon tracking and fintech for sustainable microfinance. Findings show that integrating digital innovation and green initiatives promotes transparency, efficiency, and inclusivity while reinforcing maqasid al-shariah values of environmental preservation and social equity. Theoretically, this research contributes to the integration of Triple Bottom Line and Institutional Theory perspectives within Islamic sustainable finance, while practically emphasizing the importance of harmonized ASEAN digital–green finance policies and institutional readiness. Future studies are encouraged to explore the application of artificial intelligence and regulatory technology to strengthen digital–green integration in the Islamic finance sector.