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The Boom, Bust and Restructuring of Indonesian Banks

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Author Info

  • Mari Pangestu
  • Manggi Habir

Abstract

This paper studies why currency and monetary shock hit Indonesia's economy and banking sector so severely and the measures that were taken to deal with the banking crisis, the lessons learned, and challenges faced in restructuring and strengthening the banking system. The vulnerable state of the banking sector, in combination with exchange rate and interest rate shocks, led to a systemic banking crisis. The priorities for bank restructuring are to complete the separation of nonviable from viable banks, recoup losses, implement new rules and regulations, and develop an incentive-based system for the consolidation of banks.

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Bibliographic Info

Paper provided by International Monetary Fund in its series IMF Working Papers with number 02/66.

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Length: 35
Date of creation: 01 Apr 2002
Date of revision:
Handle: RePEc:imf:imfwpa:02/66

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Related research

Keywords: Monetary policy;

References

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  1. Charles Enoch, 2000. "Interventions in Banks During Banking Crises - The Experience of Indonesia," IMF Policy Discussion Papers 00/2, International Monetary Fund.
  2. Leslie Teo & Charles Enoch & Carl-Johan Lindgren & Tomás J. T. Baliño & Anne Marie Gulde & Marc Quintyn, 2000. "Financial Sector Crisis and Restructuring:Lessons from Asia," IMF Occasional Papers 188, International Monetary Fund.
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Citations

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Cited by:
  1. Ross H. McLeod, 2005. "Indonesia's New Deposit Guarantee Law," Departmental Working Papers 2005-08, The Australian National University, Arndt-Corden Department of Economics.
  2. Rasyad A. Parinduri & Yohanes E. Riyanto, 2007. "Do Banks Respond to Capital Requirement? Evidence from Indonesia," Finance Working Papers 21932, East Asian Bureau of Economic Research.
  3. Margono, Heru & Sharma, Subhash C. & Melvin II, Paul D., 2010. "Cost efficiency, economies of scale, technological progress and productivity in Indonesian banks," Journal of Asian Economics, Elsevier, vol. 21(1), pages 53-65, February.
  4. Gary Gorton & Lixin Huang, 2002. "Liquidity, Efficiency and Bank Bailouts," NBER Working Papers 9158, National Bureau of Economic Research, Inc.
  5. Rasyad A. Parinduri & Yohanes E. Riyanto, 2007. "The effect of Strategic Sale of Banks : Evidence from Indonesia," Development Economics Working Papers 21923, East Asian Bureau of Economic Research.
  6. Aykut Kibritcioglu, 2002. "Monitoring Banking Sector Fragility," Macroeconomics 0206004, EconWPA, revised 05 Apr 2004.
  7. Obben, James & Nugroho, Agus Eko, 2003. "Determinants Of The Funding Volatility Of Indonesian Banks: A Dynamic Model," Discussion Papers 23700, Massey University, Department of Applied and International Economics.
  8. Donsyah Yudistira, 2002. "The Impact of Bank Capital Requirements in Indonesia," Finance 0212002, EconWPA, revised 18 May 2003.
  9. Stephen Grenville, 2004. "The IMF and the Indonesian crisis," Bulletin of Indonesian Economic Studies, Taylor & Francis Journals, vol. 40(1), pages 77-94.
  10. Siregar, Reza Y., 2002. "Interest Rate Policy And Its Implication On The Banking Restructuring Programs In Indonesia During The 1997-Financial Crisis: An Empirical Investigation," EIJS Working Paper Series 154, The European Institute of Japanese Studies.
  11. Glenn Hoggarth & Jack Reidhill & Peter Sinclair, 2004. "On the resolution of banking crises: theory and evidence," Bank of England working papers 229, Bank of England.
  12. Vicente Cu�At, 2009. "Finance for Development: Latin America in a Comparative Perspective. By BARBARA STALLINGS with ROGERIO STUDART," Economica, London School of Economics and Political Science, vol. 76(301), pages 216-217, 02.
  13. Rahmatina A. Kasri, 2011. "Explaining the Twin Crises in Indonesia," Working Papers in Economics and Business 201102, Faculty of Economics, University of Indonesia, revised May 2011.

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