Bank Lending Channel and Foreign Banks in Indonesia  

Oleh:

Fazaalloh, Al Muizzuddin ; Sasongko

Jenis: Article from Proceeding
Dalam koleksi: SIBR-Thammasat 2014 Conference on Interdisciplinary Business & Economics Research June 5th- 7th, 2014 di Emerald Hotel Bangkok, page 1-18.
Topik: Monetary Policy; Bank Lending Channel; Foreign Banks
Fulltext: b14-123.pdf (186.83KB)

Isi artikel

The purpose of this study is to examine the transmission of monetary policy through bank credit. In this context, the effectiveness of bank credit as one of the transmission line of monetary policy needs to be investigated. This will allow policy makers to determine the direction of appropriate policy for targeting the real sector of the economy. The method used in this study is panel regression. In this present study, the data were obtained from the monthly periodbetween 2002:1 to 2007:12. Ten foreign banks publicized on the website of Bank Indonesia were observed. The findings show that the response of bank lending to the monetary policy is determined by the size of assets or capitalization. Banks with small size of assets or capital tend to be more responsive to the monetary policy. On the other hand, banks with large size of assets or capitalization are less responsive to the monetary policy. This study proves that banks with large size of assets or capitalization are more responsive to the monetary policy than banks with smaller size of assets or capitalization. Thus, it is suggested that foreign banks have a significant role in the transmission mechanism of monetary policy in Indonesia.

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