IDEAS home Printed from https://ideas.repec.org/a/aac/ijirss/v8y2025i3p2972-2979id7122.html
   My bibliography  Save this article

The influence of governance of risk management on systemic risk in Indonesian banking for the 2019-2023 Period

Author

Listed:
  • Panji Irawan
  • Dewi Hanggraeni

Abstract

Indonesian banking plays a vital role in supporting national economic growth. However, the industry is also vulnerable to systemic risks that can undermine national financial stability. This study aims to analyze the influence of governance of risk management on systemic risk in Indonesian banking for the 2019–2023 period, using the Value at Risk (VaR) and Expected Shortfall (ES) measurement approaches. Utilizing a quantitative approach with the panel data regression method, this study examined 32 foreign exchange banks that were selected purposively. The results show that the existence of a Risk Management Committee (RMC) significantly reduces systemic risks, as measured by both the VaR and ES approaches. The use of the variance-covariance estimator (vce) cluster method successfully corrected the weaknesses of the model due to heteroscedasticity and autocorrelation. These findings confirm the importance of a strong risk governance structure in minimizing the impact of the financial crisis. The implications of these results encourage the strengthening of the role of the RMC and the adaptation of bank risk governance to respond to the evolving risk dynamics in the national financial sector.

Suggested Citation

  • Panji Irawan & Dewi Hanggraeni, 2025. "The influence of governance of risk management on systemic risk in Indonesian banking for the 2019-2023 Period," International Journal of Innovative Research and Scientific Studies, Innovative Research Publishing, vol. 8(3), pages 2972-2979.
    • Handle: RePEc:aac:ijirss:v:8:y:2025:i:3:p:2972-2979:id:7122
    as

    Download full text from publisher

    File URL: https://ijirss.com/index.php/ijirss/article/view/7122/1484
    Download Restriction: no
    ---><---

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:aac:ijirss:v:8:y:2025:i:3:p:2972-2979:id:7122. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Natalie Jean (email available below). General contact details of provider: https://ijirss.com/index.php/ijirss/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.