Monetary policy, macroprudential policy, and bank risk-taking behaviour in the Indonesian banking industry
There is a growing consensus on the translation of monetary policy actions into changes in credit demand on account of changes in interest rates. The study investigates monetary policy, macroprudential policy, bank-specific and macroeconomic determinants of bank risk-taking from 2010–2022 in Indones...
| Main Authors: | , , , , |
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| Format: | Article |
| Language: | English |
| Published: |
Taylor & Francis Group
2024-12-01
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| Series: | Journal of Applied Economics |
| Subjects: | |
| Online Access: | https://www.tandfonline.com/doi/10.1080/15140326.2023.2295732 |
| _version_ | 1826966361986826240 |
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| author | Cep Jandi Anwar Nicholas Okot Indra Suhendra Dwi Indriyani Ferry Jie |
| author_facet | Cep Jandi Anwar Nicholas Okot Indra Suhendra Dwi Indriyani Ferry Jie |
| author_sort | Cep Jandi Anwar |
| collection | DOAJ |
| description | There is a growing consensus on the translation of monetary policy actions into changes in credit demand on account of changes in interest rates. The study investigates monetary policy, macroprudential policy, bank-specific and macroeconomic determinants of bank risk-taking from 2010–2022 in Indonesia. The study aims to address a gap in the literature because most previous studies have focused on advanced markets. First, three POLS and fixed effect models are estimated. However, the Durbin Wu-Hausman test indicated endogeneity issues with the estimated models. The second stage uses a system GMM estimation to investigate the impact of central bank rates and macroprudential policy on bank risk-taking. Dynamic-GMM estimations find that, partially the central bank rate and macroprudential policy have a positive impact on bank Z-Score. Furthermore, when central bank rate and macroprudential policy are included in a model, we still find a positive impact of both policies on bank Z-Score. |
| first_indexed | 2024-03-08T19:23:57Z |
| format | Article |
| id | doaj.art-e5928b4a277a48d89f2bd4816a81186c |
| institution | Directory Open Access Journal |
| issn | 1514-0326 1667-6726 |
| language | English |
| last_indexed | 2025-02-18T03:34:39Z |
| publishDate | 2024-12-01 |
| publisher | Taylor & Francis Group |
| record_format | Article |
| series | Journal of Applied Economics |
| spelling | doaj.art-e5928b4a277a48d89f2bd4816a81186c2024-11-22T09:09:02ZengTaylor & Francis GroupJournal of Applied Economics1514-03261667-67262024-12-0127110.1080/15140326.2023.2295732Monetary policy, macroprudential policy, and bank risk-taking behaviour in the Indonesian banking industryCep Jandi Anwar0Nicholas Okot1Indra Suhendra2Dwi Indriyani3Ferry Jie4Department of Economics, University of Sultan Ageng Tirtayasa, Serang, IndonesiaDepartment of Economics, University of Sultan Ageng Tirtayasa, Serang, IndonesiaDepartment of Economics, University of Sultan Ageng Tirtayasa, Serang, IndonesiaDepartment of Economics, University of Sultan Ageng Tirtayasa, Serang, IndonesiaSchool of Business and Law, Edith Cowan University, Perth, AustraliaThere is a growing consensus on the translation of monetary policy actions into changes in credit demand on account of changes in interest rates. The study investigates monetary policy, macroprudential policy, bank-specific and macroeconomic determinants of bank risk-taking from 2010–2022 in Indonesia. The study aims to address a gap in the literature because most previous studies have focused on advanced markets. First, three POLS and fixed effect models are estimated. However, the Durbin Wu-Hausman test indicated endogeneity issues with the estimated models. The second stage uses a system GMM estimation to investigate the impact of central bank rates and macroprudential policy on bank risk-taking. Dynamic-GMM estimations find that, partially the central bank rate and macroprudential policy have a positive impact on bank Z-Score. Furthermore, when central bank rate and macroprudential policy are included in a model, we still find a positive impact of both policies on bank Z-Score.https://www.tandfonline.com/doi/10.1080/15140326.2023.2295732Central bank ratemacroprudential policyZ-Scorebank risk-taking |
| spellingShingle | Cep Jandi Anwar Nicholas Okot Indra Suhendra Dwi Indriyani Ferry Jie Monetary policy, macroprudential policy, and bank risk-taking behaviour in the Indonesian banking industry Journal of Applied Economics Central bank rate macroprudential policy Z-Score bank risk-taking |
| title | Monetary policy, macroprudential policy, and bank risk-taking behaviour in the Indonesian banking industry |
| title_full | Monetary policy, macroprudential policy, and bank risk-taking behaviour in the Indonesian banking industry |
| title_fullStr | Monetary policy, macroprudential policy, and bank risk-taking behaviour in the Indonesian banking industry |
| title_full_unstemmed | Monetary policy, macroprudential policy, and bank risk-taking behaviour in the Indonesian banking industry |
| title_short | Monetary policy, macroprudential policy, and bank risk-taking behaviour in the Indonesian banking industry |
| title_sort | monetary policy macroprudential policy and bank risk taking behaviour in the indonesian banking industry |
| topic | Central bank rate macroprudential policy Z-Score bank risk-taking |
| url | https://www.tandfonline.com/doi/10.1080/15140326.2023.2295732 |
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