Cash waqf linked sukuk and the integration of Islamic social finance into Indonesia's fiscal policy framework: A PESTEL analysis

Purpose – This study examines how Islamic social finance, particularly cash waqf mobilised through Cash Waqf Linked Sukuk (CWLS), relates to Indonesia's fiscal policy framework, identifies the political, economic, social, technological, environmental, and legal (PESTEL) conditions shaping it, and derives a classification of its institutional forms. Design – The study adopts a qualitative field research design within an interpretive paradigm. Data were collected through semi-structured interviews with four key informants, non-participant observation, and analysis of regulations, official issuance documents, and institutional reports. Data were analysed abductively using deductive PESTEL categorisation and inductive sub-theme coding, and single-informant claims were flagged. Findings – The findings indicate that CWLS contributes to strengthening social financing capacity rather than functioning as a fiscal revenue instrument. The development of CWLS faces key constraints, including low public awareness of waqf, limited nazhir capacity, weak nazhir reporting systems, and regulatory gaps. Among the three modes of integrating Islamic social finance into fiscal policy; parallel complementarity, coordinative alignment, and fiscal incorporation; coordinative alignment represents the most feasible approach for further development. Research Implications – The study proposes three modes of interface between Islamic social finance and fiscal policy (parallel complementarity, coordinative alignment, and fiscal incorporation) and suggests coordinative alignment as the more feasible near-term direction. These are propositions derived from qualitative evidence and require validation through quantitative, mixed-methods, and cross-country research. Originality – The study contributes a three-mode institutional framework that distinguishes relationships by fund control, accounting treatment, and institutional linkage, and corrects the treatment of CWLS as an expansion of fiscal space.