A causal analysis of Cash Waqf Linked Sukuk (CWLS) optimization in the digital finance ecosystem : a DEMATEL-ANP approach

Abstract

Cash Waqf Linked Sukuk (CWLS) is an innovative Islamic social finance instrument that combines cash waqf and sovereign sukuk to support sustainable socio-economic development in Indonesia. This instrument offers great promise, but the optimization of its utility within the digital finance ecosystem is still constrained by a number of institutional, behavioral, governance and competitiveness challenges. This leads to the main research question of how CWLS can be optimized to be a more effective instrument for socio-economic and sustainable financing in Islamic finance. This study aims to answer the question of what are the cause-effect relationships between the supporting and inhibiting factors of its optimization and what are the strategic priorities for strengthening its implementation through digital finance. The study uses the DANP (Dematel based Analytic Network Process) approach. The study is based on experts from three groups of stakeholders government/regulatory bodies, institutional distribution partners and academicians. Potential factors were identified through an extensive literature review and validated using the Content Validity Index (CVI) and Modified Kappa statistics. Then, the potential factors were analyzed using DANP to identify causal relationships and interdependencies and to establish strategic priorities. The results show that literacy, trust, professionalism, transparency and competitiveness are the main dimensions that influence the optimization of the instrument. Trust was found to be the most important supporting dimension while literacy and competitiveness were the key driving dimensions throughout the ecosystem. The inhibiting perspective shows that the main obstacles are low public awareness of waqf and this instrument, weak positioning and competitiveness, accountability and transparency issues, and limited managerial capacity of waqf institutions. Digital finance is found to be an enabling ecosystem enhancing accessibility, transparency, stakeholder engagement, institutional efficiency and information dissemination in these dimensions. The overall findings point to the potential for CWLS to be optimized as a more effective instrument for socio-economic and sustainable Islamic financing by a sequenced strategy that first enhances digital-based literacy and competitiveness, then institutional trust and transparency, which are then consolidated through stronger professional governance. This study contributes to the literature on Islamic social finance by offering a holistic causal and priority-based framework for optimizing this instrument and offers practical recommendations for policymakers, waqf institutions, Islamic financial institutions and other stakeholders seeking to enhance its sustainability within Indonesia's digital finance ecosystem.