Impact of foreign capital entry in the Indonesian banking sector
After the Asian financial crisis of 1997/98, the Indonesian banking sector experienced significant changes. Ownership structure of banking sector is substantially-changed. Currently, ownership of major commercial banks is dominated by foreign capital through acquisition. This paper examines whether foreign ownership changes a bankâ€™s lending behavior and performance. Foreign banks tend to lend mainly to large firms; this paper examines whether the credit to small and medium-sized enterprises (SMEs) is affected by foreign capital entry into the Indonesian banking sector. Empirical results show that banks owned by foreign capital tend to decrease SME credit.
|Date of creation:||Mar 2013|
|Publication status:||Published in IDE Discussion Paper. No. 406. 2013.3|
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