How Well Is Indonesia’s Financial System Working?

Hamilton‐Hart, Natasha

doi:10.1355/ae35-2b

Cited by 4 publications

(2 citation statements)

References 21 publications

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“…The banking sector owns 76.1% of the total assets of the financial sector in Indonesia. Foreign bank penetration in Indonesia is indicated by foreign ownership controlling more than 50% of the assets of National Private Commercial Banks and 27.6% of total bank assets domestically (Hamilton-Hart, 2018). The trend of foreign bank penetration in the Indonesian banking sector tends to increase through the merger and acquisition of bank domestic.…”

Section: Introductionmentioning

confidence: 99%

Dynamics Analysis of Credit Transmission on Foreign Bank Penetration in Indonesia

Ekananda

2022

J. Keuang. dan Perbank.

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Studies explore mode penetration bank foreign in transmission credit channel in Indonesia. ARDL-PMG is used for analyzing Office Bank branch Foreign (FOB) and Foreign Acquired Banks (FAB) on data panel bank-level, using the BI-7DR Days Reverse-repo rate and JIBR as monetary policy indicators. This study uses data on individual banks classified as FBO and FAB in Indonesia. The use of the ARDL-PMG model as an alternative to solve dynamic heterogeneous panels on credit channel problems in Indonesia. The main finding of this study proves that FBO and FAB show different credit channel transmission mechanisms in response to monetary policy. Studies also show that monetary policy contraction significantly impact towards FBO and FAB in Indonesia in the long-run. This studies due to the characteristics of Foreign Bank Branch Offices that are risk averse and have higher liquidity and Foreign Acquired Banks with higher capitalization. This characteristic causes the impact of contractionary monetary policy insignificant on FBO credit growth and FAB. The research has implications for financial and banking authorities to improve supervision over credit transmission at FBO and FAB due to differences in credit channel transmission mechanisms in response to monetary policy.

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Section: Introductionmentioning

confidence: 99%

Dynamics Analysis of Credit Transmission on Foreign Bank Penetration in Indonesia

Ekananda

2022

J. Keuang. dan Perbank.

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“…For this study, we used bank-loan data on public companies in Indonesia for the following reasons. First, the Indonesian banking system is structurally segmented and, as it is dominated by large banks, there is a very low degree of market competition (Hamilton-Hart, 2018) [1]. In 2017, there were 115 commercial banks in Indonesia, of which only five were categorized as Buku IV banks (i.e.…”

Section: Introductionmentioning

confidence: 99%

Lending relationships, credit ratings and bank loan spreads: evidence from Indonesian listed companies

Chandera¹,

Setia-Atmaja²

2020

IJMF

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PurposeThis study examines the impact of firm-bank relationships on bank loan spreads and the mitigating role of firm credit ratings on that impact.Design/methodology/approachThe study sample consists of Indonesian publicly listed companies for the period 2006 to 2016; bank-loan data was extracted from the Loan Pricing Corporation Dealscan database. For the degree of firm-bank relationships, the data on each loan is manually computed, using five different methods taken from Bharath et al. (2011) and Fields et al. (2012). All of the regression analyses are controlled for the year fixed effects, heteroscedasticity, and firm-level clustering. To address the endogeneity issues, this study uses several methods, including partitioning the sample, running nearest-neighbour and propensity score matching tests, and using instrumental variables in two-staged least-squares regression models.FindingsIn line with relationship theory and in opposition to the hold-up argument, this study finds that lending relationships reduce bank loan spreads and that the impact is more noticeable among non-rated Indonesian firms. Specifically, each additional unit in the total number of years of a firm-bank relationship and the number of previous loan contracts with the same bank are associated with 7.34 and 9.15 basis-point decreases, respectively, in these loan spreads.Practical implicationsCorporations and banks should maintain close, long-term relationships to reduce the screening and monitoring costs of borrowing. Regulators should create public policies that encourage banks to put more emphasis on relationships in their lending practices, especially in relation to crisis-prone companies.Originality/valueTo the best of the authors’ knowledge, this is the first study to examine the impact of lending relationships on bank loan spreads in Indonesia. The study offers insights on banking relationships in emerging markets with concentrated banking industries, underdeveloped capital markets and prominent business-group affiliations.

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Efforts to Increase Core Capital for Core Capital Bank Group Base on Regulation

Rahayu

Isfianadewi

2023

Lecture Notes in Networks and Systems

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How Well Is Indonesia’s Financial System Working?

Cited by 4 publications

References 21 publications

Dynamics Analysis of Credit Transmission on Foreign Bank Penetration in Indonesia

Dynamics Analysis of Credit Transmission on Foreign Bank Penetration in Indonesia

Lending relationships, credit ratings and bank loan spreads: evidence from Indonesian listed companies

Efforts to Increase Core Capital for Core Capital Bank Group Base on Regulation

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