Nowadays, technology era is coming and creates digital transformation that gradually or radically changing people’s behavior and habits as well as businesses’ activities. As the result, the transformation gradually change the ways in which how people produce, consume, and interact each other. One thing that promote such significant change is the innovation. The innovation has been affecting the financial industry dan real sector. The use of digital financial services, which is boosted by the spread of internet, smartmobile, table and the fall of information system via computer, become the basic feature triggering the innovation.

However, such innovation can disrupt existing financial industry as well as real sector, and gradually blur its boundaries. The disruption happens  when first, the rapid development of fintech does not create significant welfare gains from improvement in financial services due to inhibiting new firms entrance (supply side). Second, it does not achieve botton-up structural change in existing financial industry due to not providing transaction services without leverage, expensive trading system, not transparant, and close-access (demand side).

Such disruptive innovation, if not well managed and regulated, would threat the financial institution and real sector economy. Disruption which lead to inefficiency in the existing system characterized by increasing financial expenses, intermediated assets, unit cost and product quality, wages and employment. These factors would trigger a variety of potential sources of risks. Financial sector for example, as current rapid growth sector, without exception, will be affected by the technological revolution, given that it is at the centre of credit intermediation between savers and investors which are technologically related. In this context, digital transformation could be viewed as exogeneous shocks which is unavoidable, and uncontrolable, but would affect the ability of financial sector in extending and providing its financial services. Hence, connected with the issue of resiliency, financial sector is resilient, when it has capacity to absorb, anticipate, and adapt shocks originated from technological changes as one connected envirounment, while continuing to fulfill its function in serving real economic services.

Therefore, technological innovation basically provides two-sides effect (shocks) towards financial and real sector. First side, the technological innovation breaks down the barriers to entry in the credit and financial services markets, creating more efficient market players, raising income and prosperity in the real sector or we may call this condition as leverage-feature. Second side, the digital development can go in providing high-leverage for financial sector so that it is its self funded with less equity and equality, or we may call as leverage – bug. These two sides leave the leverage controversy in financial sector’ balance sheets. The leverage debate ilustrates an important issue to financial regulation. Policy makers and some observers may agree that too high leverage is dangerous, but too low is not suggested. The challenge is to discover the optimal ratio of leverage that becomes a daunting task. Therefore, the outstanding challenge for the authorities is to strike the right balance between promoting innovation and competition on the one side, and in the other side preserving and providing financial and real sector resilient that guarantee consumer protection and financial system stability at large.

Therefore, 4th International Conference on Islamic Economics and Financial Inclusion (ICIEFI) deals with issues on innovation and sustainability in disruptive era by discovering the balance. In addition, it is a conference aimed at providing a forum for sharing and promoting cutting-edge research in economics, banking and finance. Finally, the conference aims at facilitating intense and productive networking among academicians, policy makers, practitioners, students and other related parties.

Finally, we wish that you will have a fruitful feeling during the conference and people of Yogyakarta.


Best Regards,

Steering Committee of 4th ICIEFI 2019


Dr. Nano Prawoto

Dr. Imamuddin Yuliadi

Dr. Lilies Setiartiti

Dr. Endah Saptutyningsih

Ahmad Makruf, M.Si

Agus Tri Basuki, M.Si

Dr. Dimas Bagus Wiranatakusuma