Conceptual Proposal for Future Macroprudential Framework Under a Dual Financial System in Indonesia

Ascarya, _; Karim, Adiwarman A.; Rahmawati, Siti; Muqorrobin, Masyhudi; Wiranatakusuma, Dimas Bagus

doi:10.1007/978-3-319-30445-8_3

Cited by 3 publications

(8 citation statements)

References 4 publications

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“…In general, there are three main differences in the Islamic monetary system with the conventional monetary system (Ascarya, 2007). that are: 1.…”

Section: Conventional Monetary System Vs Islamic Monetary Systemmentioning

confidence: 99%

“…Examples of production costs for printing money with a value of Rp.100,000 are only Rp.2,000, meaning there is a profit of Rp.98,000. Such a system will cause the weakening purchasing power along with the addition of new money and this will cause high inflation and weaken the economy (Ascarya, 2007).…”

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confidence: 99%

“…bank money (demand deposits, including electronic money), through multiple deposit creation. In this case money is created when banks give loans (Ascarya, 2007).…”

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confidence: 99%

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Monetary Stability under Dual Banking System before Covid-19 Pandemic in Indonesia

Nurfalah,

Fatoni

2023

EII

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The Indonesian monetary authority or the Central Bank of Indonesia has established a policy in accordance with the constitution No. 3 in 2004, the monetary policy taken by Central Bank of Indonesia is the inflation targeting framework (ITF). To achieve this, Central Bank of Indonesia established intermediary policies which are regulating the volume of the money supply, stipulating the minimum reserves banking and regulating credit or financing. From some of these intermediary policies, the authors are interested in researching monetary policy in the dual monetary system in Indonesia, where the instruments used by each monetary system are different, so which system is the most stable and sustains Indonesia's growth and which system is the best to achieve ITF goals. The method used is Autoregressive Distributed Lag (ARDL) with data from 2010-sep 2018. The results show that the instruments used in conventional monetary systems based on interest rates have no influence on economic growth, whereas instruments in the Islamic monetary system have an influence on economic growth.

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“…In general, there are three main differences in the Islamic monetary system with the conventional monetary system (Ascarya, 2007). that are: 1.…”

Section: Conventional Monetary System Vs Islamic Monetary Systemmentioning

confidence: 99%

mentioning

confidence: 99%

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Monetary Stability under Dual Banking System before Covid-19 Pandemic in Indonesia

Nurfalah,

Fatoni

2023

EII

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“…At another framework, a model developed by Ascarya et al, (2016), provide a monitoring process to the financial system. The framework adopts a convept of early warning system which will five a risk signals in the first step in carrying out the macroprudential supervision process.…”

Section: Introductionmentioning

confidence: 99%

Macroprudential Policy and Credit Risk in Dual Banking System

Musta’in

Fakhrunnas

2021

EDAJ

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Issues related to financial stability are a very complex problem, especially the global crisis impact in 2008. Based on these conditions, the Basel Committee on Banking Supervision introduced a macroprudential policy to mitigate financial system risk systemically. The study aims to analyze the impact of macroprudential policy on the banksâ€™ risk exposure by adopting credit risk as a risk proxy. By adopting a panel dynamic approach, credit risk is used to be a dependent variable while independent variables consist of the reserve requirement, capital buffer, and a net open position in either conventional and Islamic banks. The observation period starts from 2014 to 2019 with quarterly data, and it involves 22 banks in Indonesia. The study found that macroprudential policy has a long-run relationship to Islamic banks' credit risk but not to conventional banks. The result from Variance Decompositions (VDs) and Impulse Response Factors (IRFs) also showed that each independent variables have an impact to credit risk value in many different directions. According to that, this study suggests that Indonesian financial authority has to pay attention to the different effectiveness and impact of its macroprudential policy, which has to consider the specific characteristics of either conventional or Islamic banks..

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“…However, the two policies will be more effective when combined with other policies such as monetary policy and fiscal policy. Besides, the combination of all systems can promote the creation of financial stability (Ascarya et al, 2016). The relationship between macroprudential and monetary policies is the same as coordinating monetary policy with fiscal policy, to achieve optimal economic results since they are not merely substituting.…”

Section: Introductionmentioning

confidence: 99%

The Impact of Banking Policies to the Macroprudential Policy

Kharohmayani

Wiryono

2020

jejak

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The interaction between banks and macroeconomics is of crucial importance to financial stability. This study aims to answer the question of how macroeconomic shocks are transmitted to banking variables or vice versa. The study investigated the impact of the banking policies, the principal component of analysis (PCA) of banking quality indicators (CAMEL), and BI's rate to the aggregate of GDP and GDP priority sectors. The methodology used is the Factor Augmented Vector Autoregressive (FAVAR) model to observe the endogeneity of the observed variables. The results show that there is substantial heterogeneity in the transmission of macroeconomic shocks, caused by CAR, CAMEL and BI rate. In the short run, we find that the impulse response functions of aggregate GDP and GDP per sector of priority to the shock of the CAR decrease and close to zero in the long term. Our findings align with the expected effects that the CAMEL has implications to the decline of GDP of priority sector. Finally, we find that the impulse response of aggregate GDP and GDP of the priority sector to monetary policy shock decreases in the short run and near to zero in the more extended period

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Conceptual Proposal for Future Macroprudential Framework Under a Dual Financial System in Indonesia

Cited by 3 publications

References 4 publications

Monetary Stability under Dual Banking System before Covid-19 Pandemic in Indonesia

Monetary Stability under Dual Banking System before Covid-19 Pandemic in Indonesia

Macroprudential Policy and Credit Risk in Dual Banking System

The Impact of Banking Policies to the Macroprudential Policy

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