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Indonesia

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  • Arto Kovanen
  • Olivier Frécaut
  • Barbara E. Baldwin
  • Charles Enoch
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    Abstract

    This study looks at the first two years of the banking crisis that erupted in Indonesia in late 1997. It finds that the banking sector was weak at the outset, and that governance problems intensified the crisis and seriously delayed its resolution. Although a strategy was put in place over the initial months, protracted delays in implementation led to an explosion in the costs of resolution. By end-1999, the critical elements to reconstruct the banking system were in place, and the political transition seemed completed; but, in a continuing unsettled environment, the new authorities still faced daunting challenges. This study looks at the first two years of the banking crisis that erupted in Indonesia in late 1997. It finds that the banking sector was weak at the outset, and that governance problems intensified the crisis and seriously delayed its resolution. Although a strategy was put in place over the initial months, protracted delays in implementation led to an explosion in the costs of resolution. By end-1999, the critical elements to reconstruct the banking system were in place, and the political transition seemed completed; but, in a continuing unsettled environment, the new authorities still faced daunting challenges. This study looks at the first two years of the banking crisis that erupted in Indonesia in late 1997. It finds that the banking sector was weak at the outset, and that governance problems intensified the crisis and seriously delayed its resolution. Although a strategy was put in place over the initial months, protracted delays in implementation led to an explosion in the costs of resolution. By end-1999, the critical elements to reconstruct the banking system were in place, and the political transition seemed completed; but, in a continuing unsettled environment, the new authorities still faced daunting challenges.

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    Bibliographic Info

    Paper provided by International Monetary Fund in its series IMF Working Papers with number 01/52.

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    Length: 139
    Date of creation: 01 May 2001
    Date of revision:
    Handle: RePEc:imf:imfwpa:01/52

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    Related research

    Keywords: Banking crisis; Bank restructuring; banking; recapitalization; banking sector; banking system; foreign exchange; bank closures; private bank; banking supervision; state bank; bank indonesia; interbank market; capital adequacy; connected lending; asset management; bank recapitalization; closed banks; joint recapitalization; bank liquidity; debt restructuring; bankers; bank supervision; corporate sector; asian crisis; financial crisis; banking law; bank owners; economic crisis; segmentation; insolvent banks; currency depreciation; banking crises; bank group; banking sector assets; pre-crisis; systemic banking crisis; central bank liquidity; private banking; bank law; bank deposits; bank crisis; contagion; loan classification; denominated loans; holding company; banks ? assets; banking distress; capital requirement; capital adequacy ratio; asset management companies; bank restructuring agencies; bank credit; bank runs; deposit insurance; currency crisis; present value; systemic crisis; international accounting standards; crisis countries; foreign exchange market; deposit guarantee; excess liquidity; interbank money market; accounting standards; financial sector crisis; political interference; bank branches; recession; banks ? loan; evergreening; financial distress; consolidated supervision; bank insolvency; banking services; financial sector liberalization; restructuring agencies; bank funding; macroeconomic stabilization; systemic bank crisis; asian financial crisis; bank capital; bank licenses; bank interventions; credit supervision; financial crises; bank ownership; bank financing; prudential regulation; banking system assets; reserve requirement; prudential supervision; liquidation of banks; accounting procedure; capital base; financial sector development; bank managements; banking information; bank audits; internal control; banking sector developments; banking sector reforms; banking sector liquidity; bank profitability; banking practice; banking community; banks ? balance sheets; central banking; bank loan; bank credit ceilings; banker; bank managers; bank records; acute crisis; minimum reserve requirement; deposit protection; banking practices; deep insolvency; clearing house; bank intermediation; bank depositors; domestic liquidity; tier 1 capital; limited deposit insurance; problem bank; bank claims; bank assistance; banking experts; bank rating; economic recession; banking supervisors; bank debt; bank classification; bank liabilities; runs on banks; bank valuations; rating agencies; settlement system; macroeconomic stability; capital standard; banking sector problems; bankers ? acceptances; bank accounts; banking systems; bank deposit; bank management; disintermediation; currency crises; bank owner; bank creditors; bank loans; bank closure; bank program; payment agreement; bank holdings;

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    Cited by:
    1. Uma Ramakrishnan & Athanasios Vamvakidis, 2002. "Forecasting Inflation in Indonesia," IMF Working Papers 02/111, International Monetary Fund.

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