IDEAS home Printed from https://ideas.repec.org/a/eee/teinso/v81y2025ics0160791x25000284.html
   My bibliography  Save this article

Algorithmic trust and regulation: Governance, ethics, legal, and social implications blueprint for Indonesia's central banking

Author

Listed:
  • Perdana, Arif
  • Arifin, Saru
  • Quadrianto, Novi

Abstract

Algorithm-driven financial systems significantly influence monetary stability and payment transactions. While these systems bring opportunities like automation and predictive analytics, they also raise ethical concerns, particularly biases embedded in historical data. Recognizing the critical role of governance, ethics, legal considerations, and social implications (GELSI), this study introduces a framework tailored for algorithmic systems in financial services, focusing on Indonesia's evolving regulatory environment. Using the Multiple Streams Approach (MSA) as our theoretical lens, we offer a framework that augments existing quantitative methodologies. Our study provides a nuanced, qualitative perspective on algorithmic trust and regulation. We proffer actionable strategies for the Central Bank of Indonesia (BI), emphasizing stringent data governance, system resilience, and cross-sector collaboration. Our findings highlight the critical importance of ethical guidelines and robust governmental policies in mitigating algorithmic risks. We combine theory and practical advice to show how to align problems, policies, and politics to create practical opportunities for algorithmic governance. This study contributes to the evolving discourse on responsible financial technology. Our study recommends a balanced way to manage the challenges of innovation, regulation, and ethics in the age of algorithms.

Suggested Citation

  • Perdana, Arif & Arifin, Saru & Quadrianto, Novi, 2025. "Algorithmic trust and regulation: Governance, ethics, legal, and social implications blueprint for Indonesia's central banking," Technology in Society, Elsevier, vol. 81(C).
  • Handle: RePEc:eee:teinso:v:81:y:2025:i:c:s0160791x25000284
    DOI: 10.1016/j.techsoc.2025.102838
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0160791X25000284
    Download Restriction: Full text for ScienceDirect subscribers only

    File URL: https://libkey.io/10.1016/j.techsoc.2025.102838?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to

    for a different version of it.

    References listed on IDEAS

    as
    1. Nikolaos Zahariadis, 2016. "Delphic oracles: ambiguity, institutions, and multiple streams," Policy Sciences, Springer;Society of Policy Sciences, vol. 49(1), pages 3-12, March.
    2. Alexander Boer & Léon Beer & Frank Praat, 2023. "Algorithm Assurance: Auditing Applications of Artificial Intelligence," Progress in IS, in: Egon Berghout & Rob Fijneman & Lennard Hendriks & Mona de Boer & Bert-Jan Butijn (ed.), Advanced Digital Auditing, pages 149-183, Springer.
    3. Rupa Mahanti, 2021. "Data Governance and Data Management Functions and Initiatives," Springer Books, in: Data Governance and Data Management, chapter 0, pages 83-143, Springer.
    4. Chang, Tsung-Sheng & Hsieh, Yao-Chian, 2024. "Applying the analytic hierarchy process for investigating key indicators of responsible innovation in the Taiwan software service industry," Technology in Society, Elsevier, vol. 78(C).
    5. Giudici, Paolo & Leach, Thomas & Pagnottoni, Paolo, 2022. "Libra or Librae? Basket based stablecoins to mitigate foreign exchange volatility spillovers," Finance Research Letters, Elsevier, vol. 44(C).
    6. Kuziemski, Maciej & Misuraca, Gianluca, 2020. "AI governance in the public sector: Three tales from the frontiers of automated decision-making in democratic settings," Telecommunications Policy, Elsevier, vol. 44(6).
    7. Hałaj, Grzegorz & Martinez-Jaramillo, Serafin & Battiston, Stefano, 2024. "Financial stability through the lens of complex systems," Journal of Financial Stability, Elsevier, vol. 71(C).
    8. Ahmed, Shamima & Alshater, Muneer M. & Ammari, Anis El & Hammami, Helmi, 2022. "Artificial intelligence and machine learning in finance: A bibliometric review," Research in International Business and Finance, Elsevier, vol. 61(C).
    9. Carlsson, Vanja & Rönnblom, Malin, 2022. "From politics to ethics: Transformations in EU policies on digital technology," Technology in Society, Elsevier, vol. 71(C).
    10. Madjid Tavana & Mehdi Soltanifar & Francisco J. Santos-Arteaga, 2023. "Analytical hierarchy process: revolution and evolution," Annals of Operations Research, Springer, vol. 326(2), pages 879-907, July.
    11. Daníelsson, Jón & Macrae, Robert & Uthemann, Andreas, 2022. "Artificial intelligence and systemic risk," Journal of Banking & Finance, Elsevier, vol. 140(C).
    12. Jalan, Akanksha & Matkovskyy, Roman, 2023. "Systemic risks in the cryptocurrency market: Evidence from the FTX collapse," Finance Research Letters, Elsevier, vol. 53(C).
    13. Buhmann, Alexander & Fieseler, Christian, 2021. "Towards a deliberative framework for responsible innovation in artificial intelligence," Technology in Society, Elsevier, vol. 64(C).
    14. Shiyun Li & Yiping Huang, 2020. "Do Cryptocurrencies Increase the Systemic Risk of the Global Financial Market?," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 28(1), pages 122-143, January.
    15. Yaser Faghan & Nancirose Piazza & Vahid Behzadan & Ali Fathi, 2020. "Adversarial Attacks on Deep Algorithmic Trading Policies," Papers 2010.11388, arXiv.org.
    16. Ahelegbey, Daniel Felix & Giudici, Paolo & Hadji-Misheva, Branka, 2019. "Latent factor models for credit scoring in P2P systems," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 522(C), pages 112-121.
    17. Giudici, Paolo & Raffinetti, Emanuela, 2023. "SAFE Artificial Intelligence in finance," Finance Research Letters, Elsevier, vol. 56(C).
    18. Ivy Munoko & Helen L. Brown-Liburd & Miklos Vasarhelyi, 2020. "The Ethical Implications of Using Artificial Intelligence in Auditing," Journal of Business Ethics, Springer, vol. 167(2), pages 209-234, November.
    19. repec:imf:imfdps:2021/024 is not listed on IDEAS
    20. Rupa Mahanti, 2021. "Introduction to Data, Data Governance, and Data Management," Springer Books, in: Data Governance and Data Management, chapter 0, pages 1-3, Springer.
    21. El Bachir Boukherouaa & Mr. Ghiath Shabsigh & Khaled AlAjmi & Jose Deodoro & Aquiles Farias & Ebru S Iskender & Mr. Alin T Mirestean & Rangachary Ravikumar, 2021. "Powering the Digital Economy: Opportunities and Risks of Artificial Intelligence in Finance," IMF Departmental Papers / Policy Papers 2021/024, International Monetary Fund.
    22. Rupa Mahanti, 2021. "Data Governance and Data Management—Concluding Thoughts and Way Forward," Springer Books, in: Data Governance and Data Management, chapter 0, pages 169-173, Springer.
    23. Bartlett, Robert & Morse, Adair & Stanton, Richard & Wallace, Nancy, 2022. "Consumer-lending discrimination in the FinTech Era," Journal of Financial Economics, Elsevier, vol. 143(1), pages 30-56.
    24. Arslan, Ahmad & Ahokangas, Petri & Haapanen, Lauri & Golgeci, Ismail & Tarba, Shlomo Y. & Bazel-Shoham, Ofra, 2022. "Generational differences in organizational leaders: an interpretive phenomenological analysis of work meaningfulness in the Nordic high-tech organizations," Technological Forecasting and Social Change, Elsevier, vol. 180(C).
    25. Jadranka Švarc & Marina Dabić & Metka Tekavčič, 2024. "Controversies surrounding digitalization: discussions in four key domains," Chapters, in: Marina Dabić & Jadranka Å varc & Tugrul U. Daim (ed.), Digital Entrepreneurship in Science, Technology and Innovation, chapter 15, pages 353-372, Edward Elgar Publishing.
    26. Morley, Jessica & Machado, Caio C.V. & Burr, Christopher & Cowls, Josh & Joshi, Indra & Taddeo, Mariarosaria & Floridi, Luciano, 2020. "The ethics of AI in health care: A mapping review," Social Science & Medicine, Elsevier, vol. 260(C).
    27. Nikolaos Zahariadis, 2016. "Delphic oracles: ambiguity, institutions, and multiple streams," Policy Sciences, Springer;Society of Policy Sciences, vol. 49(1), pages 3-12, March.
    28. Aldasoro, Iñaki & Gambacorta, Leonardo & Giudici, Paolo & Leach, Thomas, 2022. "The drivers of cyber risk," Journal of Financial Stability, Elsevier, vol. 60(C).
    29. Christoph Frei, 2023. "Open Banking: Opportunities and Risks," Palgrave Studies in Financial Services Technology, in: Thomas Walker & Elaheh Nikbakht & Maher Kooli (ed.), The Fintech Disruption, chapter 0, pages 167-189, Palgrave Macmillan.
    30. Lars Michael Bollweg, 2022. "Data Governance for Managers," Management for Professionals, Springer, number 978-3-662-65171-1, September.
    31. Rupa Mahanti, 2021. "Data Governance and Data Management," Springer Books, Springer, number 978-981-16-3583-0, January.
    32. Coeckelbergh, Mark, 2018. "Technology and the good society: A polemical essay on social ontology, political principles, and responsibility for technology," Technology in Society, Elsevier, vol. 52(C), pages 4-9.
    33. Xu Zhang & Zhijing Ding & Ning Cai, 2021. "Multiscale Systemic Risk and Its Spillover Effects in the Cryptocurrency Market," Complexity, Hindawi, vol. 2021, pages 1-22, June.
    34. Leitner, Georg & Singh, Jaspal & van der Kraaij, Anton & Zsámboki, Balázs, 2024. "The rise of artificial intelligence: benefits and risks for financial stability," Financial Stability Review, European Central Bank, vol. 1.
    35. Nicolas Suhadolnik & Jo Ueyama & Sergio Da Silva, 2023. "Machine Learning for Enhanced Credit Risk Assessment: An Empirical Approach," JRFM, MDPI, vol. 16(12), pages 1-21, November.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Zhang, Weidong & Zuo, Na & He, Wu & Li, Songtao & Yu, Lu, 2021. "Factors influencing the use of artificial intelligence in government: Evidence from China," Technology in Society, Elsevier, vol. 66(C).
    2. Neomi Frisch-Aviram & Nissim Cohen & Itai Beeri, 2018. "Low-level bureaucrats, local government regimes and policy entrepreneurship," Policy Sciences, Springer;Society of Policy Sciences, vol. 51(1), pages 39-57, March.
    3. Costantini, Mauro & Maaitah, Ahmad & Mishra, Tapas & Sousa, Ricardo M., 2023. "Bitcoin market networks and cyberattacks," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 630(C).
    4. Boubaker, Sabri & Karim, Sitara & Naeem, Muhammad Abubakr & Rahman, Molla Ramizur, 2024. "On the prediction of systemic risk tolerance of cryptocurrencies," Technological Forecasting and Social Change, Elsevier, vol. 198(C).
    5. MacCarthaigh Muiris, 2017. "Reforming the Irish public service: A multiple streams perspective," Administration, Sciendo, vol. 65(2), pages 145-164, May.
    6. Yi Yang, 2022. "The fable of policy entrepreneurship? Understanding policy change as an ontological problem with critical realism and institutional theory," Policy Sciences, Springer;Society of Policy Sciences, vol. 55(3), pages 573-591, September.
    7. Curcio, Domenico & D’Amico, Simona & Gianfrancesco, Igor & Vioto, Davide, 2024. "Understanding the impact of the financial technology revolution on systemic risk: Evidence from US and EU diversified financials," Research in International Business and Finance, Elsevier, vol. 69(C).
    8. Diego Sanjurjo, 2020. "Taking the multiple streams framework for a walk in Latin America," Policy Sciences, Springer;Society of Policy Sciences, vol. 53(1), pages 205-221, March.
    9. Wang, Weisha & Wang, Yichuan & Chen, Long & Ma, Rui & Zhang, Minhao, 2024. "Justice at the Forefront: Cultivating felt accountability towards Artificial Intelligence among healthcare professionals," Social Science & Medicine, Elsevier, vol. 347(C).
    10. Rahman, Molla Ramizur & Naeem, Muhammad Abubakr & Yarovaya, Larisa & Mohapatra, Sabyasachi, 2024. "Unravelling systemic risk commonality across cryptocurrency groups," Finance Research Letters, Elsevier, vol. 65(C).
    11. Darryl S.L. Jarvis & Alex Jingwei He, 2020. "Policy entrepreneurship and institutional change: Who, how, and why?," Public Administration & Development, Blackwell Publishing, vol. 40(1), pages 3-10, February.
    12. Vallès-Peris, Núria & Domènech, Miquel, 2024. "Digital citizenship at school: Democracy, pragmatism and RRI," Technology in Society, Elsevier, vol. 76(C).
    13. Brydie Clarke & Boyd Swinburn & Gary Sacks, 2018. "Understanding Health Promotion Policy Processes: A Study of the Government Adoption of the Achievement Program in Victoria, Australia," IJERPH, MDPI, vol. 15(11), pages 1-19, October.
    14. Elizabeth A. Koebele, 2021. "When multiple streams make a river: analyzing collaborative policymaking institutions using the multiple streams framework," Policy Sciences, Springer;Society of Policy Sciences, vol. 54(3), pages 609-628, September.
    15. Zhu, Shuning & Wang, Weiye & Liu, Jinlong, 2024. "Analyzing the National Park policymaking process in China from a multiple streams perspective: Domination by the political stream and policy entrepreneurs," Forest Policy and Economics, Elsevier, vol. 169(C).
    16. Mercik, Aleksander & Słoński, Tomasz & Karaś, Marta, 2024. "Understanding crypto-asset exposure: An investigation of its impact on performance and stock sensitivity among listed companies," International Review of Financial Analysis, Elsevier, vol. 92(C).
    17. Nihit Goyal & Michael Howlett & Araz Taeihagh, 2021. "Why and how does the regulation of emerging technologies occur? Explaining the adoption of the EU General Data Protection Regulation using the multiple streams framework," Regulation & Governance, John Wiley & Sons, vol. 15(4), pages 1020-1034, October.
    18. Iñaki Aldasoro & Leonardo Gambacorta & Paolo Giudici & Thomas Leach, 2023. "Operational and Cyber Risks in the Financial Sector," International Journal of Central Banking, International Journal of Central Banking, vol. 19(5), pages 340-402, December.
    19. Giudici, Paolo & Piergallini, Alessandro & Recchioni, Maria Cristina & Raffinetti, Emanuela, 2024. "Explainable Artificial Intelligence methods for financial time series," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 655(C).
    20. Sanroman Graciela & Bertoletti Lucía & Borraz Fernando, 2024. "Consumer Debt and Poverty: the Default Risk Gap," Asociación Argentina de Economía Política: Working Papers 4765, Asociación Argentina de Economía Política.

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:teinso:v:81:y:2025:i:c:s0160791x25000284. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: https://www.journals.elsevier.com/technology-in-society .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.