مدل پرتفوی بانک ها و سیاست های پولی در اندونزی
|کد مقاله||سال انتشار||مقاله انگلیسی||ترجمه فارسی||تعداد کلمات|
|26124||2007||17 صفحه PDF||سفارش دهید||7250 کلمه|
Publisher : Elsevier - Science Direct (الزویر - ساینس دایرکت)
Journal : Journal of Asian Economics, Volume 18, Issue 1, February 2007, Pages 158–174
This paper analyzes the banks’ behavior in selecting their portfolio composition and their impact on the effectiveness of monetary policy transmission process in Indonesia. We employ an analytical model of the banking portfolio behavior based on microeconomic theory to understand how banks’ portfolio behavior in maximizing their profit links to the efficacy of monetary policy. This study finds that micro banking factors affects the effectiveness of monetary policy. This study also finds structural changes in banks and borrowers have altered the effectiveness of monetary policy to encourage the economic growth and hindered the process of economic recovery. As perception on risk has large impact in supporting the effectiveness of the monetary policy, effort to reduce risk through the formation as credit bureau, credit guarantee scheme, and rating agencies is critical as it will improve transparency and availability of debtor information. The need for better coordination and harmonization between macro and micro policies would be beneficial.
Efficient resource mobilization and financial intermediation are critical to support real sector development and boost economic growth. Banks are one of financial intermediaries that play a key role in financing economic development and more superior compare to other financial institution as banks can solve with asymmetric information and high cost operation in financial intermediary activities (Stiglitz & Greenwald, 2003). The economic literature has identified two channels through which banks exert their influence on the process of economic growth. First channel considers effect of finance to growth through capital accumulation (Hicks, 1969), where banking institutions by reducing transaction costs and by diversifying risks, enable the mobilization of savings to finance the investments necessary to stimulate and sustain economic development. Second channel, emphasizes the allocation of loans, where development is driven by innovations and the role of banks is to identify the most innovative entrepreneurs and by providing them with the purchasing power necessary to divert the means of production, contribute to economic growth. The important role of banks in emerging countries such as Indonesia is even true since the development of non-bank financial institutions has been impeded by inadequate institutional infrastructures and weak investor basis. Therefore, the rise and fall of banks in Indonesia would have strong correlation with the economic development in Indonesia. Instead of the economic development, bank behavior in selecting its portfolio composition with special attention to banks’ credit also plays an important role in explaining the monetary policy transmission, particularly in the aftermath of crisis (Agung et al., 2001). The slow growth and the lack of bank loans identified as one of the important factors causing the process of Indonesia's economic recovery to proceed slower compared to other Asian countries affected by the crisis like South Korea and Thailand. The awareness of the importance of banks’ credit in the monetary policy transmission process is driven among others by concerns over the impact of financial sector weaknesses, bank failures, non-performing loans (NPLs), and credit rationing on the effectiveness of the transmission process (see e.g., Blinder, 1987 and Bernanke and dan Blinder, 1988; Brunner & Meltzer, 1988). Recent stream of monetary policy paradigm has also acknowledged the importance of supply and demand of credits. This paper tries analyzes the banks’ behavior in selecting their portfolio composition particularly as an intermediary agent and their impact on the effectiveness of monetary policy transmission process in Indonesia. We begin with a historical overview of the development of banking sector and monetary policy in Indonesia. We then proceed with a brief explanation of the model being used in analyzing the banks’ behavior and their impact on the monetary policy. Based on this framework, we conduct an empirical simulation that will compare banks’ behavior and their impact on the effectiveness of monetary policy before and during the post-crisis period. Finally, we conclude how changes in banks portfolio behavior could alter the efficacy of monetary policy and come to the need for some policy recommendations.
نتیجه گیری انگلیسی
Micro banking condition and its portfolio behavior affects the effectiveness of monetary policy. Since the source of financing of firms in Indonesia is largely tied to bank credit, the lack and slow growth of banks’ loans has constrained monetary policy to encourage the economic growth and hindered the process of economic recovery until recently. Banks’ willingness to extend loan is also affected by external condition such as the monetary policy as well as the banking regulation. The monetary and banking policy could affect the banking behavior not only through changes in interest rate but also through changes in constrain and incentives (Stiglitz & Greenwald, 2003). For example, the contraction in monetary policy during crisis period led to further increases in bankruptcy risk which in turn worsened the risk of default on the existing loans and finally led to a further decrease in banks’ net worth and willingness to extend loans. The imposition of CAR requirement has also contributed to a decrease in banks’ willingness to supply loans. This situation leads banks tend to put their excess liquidity in low risk assets, especially in government bonds and SBIs. From the analysis above, it has shown that one of the serious problems facing the banking community in Indonesia is the asymmetric information. Risk perception, even though has been declining, is still relatively high among bankers in Indonesia which may have led them to be (overly) cautious. To overcome this problem, there is an apparent need to initiate efforts that can provide more information regarding credit-worthiness of the borrowers while at the same time trying to continue boosting the real side of the economy, if banks are willing to approve new loans. In order to overcome with the problem of asymmetric information in the banking sector, the following policy recommendations could be considered. • As perception on risk has large impact in supporting the effectiveness of the monetary policy, effort to reduce risk through the formation as credit bureau, credit guarantee scheme, credit rating, as well as law enforcement need to be improved. These policies will improve transparency and availability of debtor information, thus reducing asymmetric information problem. • The authorities could also provide more information regarding potential promising economic sectors. Considering the pervasive asymmetric information in the credit market for small and medium enterprises, the introduction of credit guarantee scheme can also be considered, with minimum moral hazard. • To improve the knowledge in assessing risks, banks should be supported to invest more in credit research and monitoring. • The maintenance of macro stability needs to be continued in order to enhance public confidence and reduce the perception of default risk. As stated by Stiglitz and Greenwald (2003) we need a reformulation regulation policy in the banking/financial sectors based on portfolio approach to regulation which includes: - Understanding that banking regulation theory should be started from a model of banking behavior. - Understanding that the authority has a limitation in controlling banking behavior. Therefore, the authority needs to take various steps that include incentive and constrain. • As both monetary policy and banking regulations gain its positive impact on loan performance, the need for better coordination and harmonization between macro and micro policies would be beneficial. • Increasing the role of non-bank financial markets and increased competition in financial markets should be promoted to reduce over dependence on banks, thereby gradually promoting a sound and efficient non bank financing and thus reducing downward rigidity in bank lending rates.