Buletin Ekonomi Moneter dan Perbankan
Vol 15 No 2 (2012): OCTOBER 2012

IMPACT OF GLOBAL FINANCIAL SHOCK TO INTERNATIONAL BANK LENDING IN INDONESIA

Silalahi, Tumpak (Unknown)
Wibowo, Wahyu Ari (Unknown)
Nurliana, Linda (Unknown)



Article Info

Publish Date
27 Dec 2012

Abstract

This study intends to determine whether a shock that occurred in developed countries, the source of funding, was transmitted to Indonesia through international bank lending both directly and indirectly. The methods used estimated the determinants of international bank lending. International bank lending is one form of capital flows that have the potential for rapid reversal and that can lead to a financial crisis as it has in the past. Understanding the determinants of bank lending is important as it can be used to mitigate the impact of a financial crisis in the future. The empirical results showed that international bank lending, either directly or indirectly, contributed to the Indonesian crisis. During the shock, Indonesia saw global banking contract financing. It was also found that credit activities by foreign affiliates in Indonesia saw a contraction in the country of the parent bank during the shock. However, it was found that the bank lending by foreign affiliates, as joint ventureswere more stable compared to the branch offices of a foreign bank. In aggregate, international bank lending is affected by push and pulls factors such as economic growth (in developed countries and Indonesia), risk factors, and liquidity conditions, both in Indonesia and globally. As for micro-banking models, other than the push and pull factors, the bank balance sheet and other portfolio assets also affected bank lending activities to Indonesia.Keywords: Global Financial Shocks, Foreign Affiliates, International Bank Lending, transmission path,dynamic panel.JEL Classification: C33, E51, G15

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Journal Info

Abbrev

BEMP

Publisher

Subject

Description

The Buletin Ekonomi Moneter dan Perbankan/Bulletin of Monetary Economics and Banking (BMEB) is an international peer-reviewed journal. This is a quarterly journal, published in January, April, July and August. The BMEB focuses on a broad range of topics covering monetary economics, banking, ...