Banking Crises and Market Discipline in Indonesian Banking Industry

Jurnal Akuntansi dan Keuangan. 2017;19(1):37-47

 

Journal Homepage

Journal Title: Jurnal Akuntansi dan Keuangan

ISSN: 1411-0288 (Print); 2338-8137 (Online)

Publisher: Petra Christian University

LCC Subject Category: Social Sciences: Commerce: Business: Accounting. Bookkeeping | Social Sciences: Finance

Country of publisher: Indonesia

Language of fulltext: Indonesian

Full-text formats available: PDF

 

AUTHORS

George Adam Sukoco Sikatan ( )
Rokhim Rokhim ( )

EDITORIAL INFORMATION

Blind peer review

Editorial Board

Instructions for authors

Time From Submission to Publication: 24 weeks

 

Abstract | Full Text

This study analyzes the effect of banking crises towards market discipline in Indonesia. This study uses two periods of crisis in Indonesia, which are banking crisis in 1997/1998 and banking crisis in 2008. The dependent variable is market discipline; while bank risks are the independet variables (insolvency, liquidity, and credit risks). The control variables are banking level (the percentage savings of the customer, bank’s size, bank’s overhead costs, and Lerner index); industrial level (banking concentration level, the bank development); and macroeconomic variables (the growth of the real gross domestic product and inflation rate). The variables examined by the Generalized Method of Moments (GMM). This study finds a fact that on average market discipline weakens after Indonesia's banking crisis in 1997/1998. On the contrary, this study found a fact that market discipline strengthens after Indonesia's banking crisis in 2008. Eventually, this study finds a fact that there is no difference in market discipline between the domestic bank and foreign bank after Indonesia's banking crisis in 2008.