Dealing with Bank System Failure: Indonesia, 1997-2002
The crisis recovery program in Indonesia has failed badly in relation to the two key objectives of development economics policy-making: efficiency and equity. The economy went into a very severe recession within a few months of the IMF appearing on the scene, and five years later output was still only at approximately the pre-crisis level. The collapse of the banking system and the associated bailout of depositors by the government has had the effect of imposing a loss on the general public, and the poor in particular, of the order of 40% of GDP. This paper describes the collapse of the banking system and the policies the government has followed in response to it, under advice from the IMF. It then goes on to propose an alternative scheme that might have been followed-and that could be followed in future banking crises-the twin objectives of which are to maintain the integrity of the payments system while avoiding inequitable wealth transfers that result from government bailouts of banks and their depositors.
|Date of creation:||2003|
|Contact details of provider:|| Postal: Crawford Building, Lennox Crossing, Building #132, Canberra ACT 2601|
Phone: +61 2 6125 4705
Fax: +61 2 6125 5448
Web page: https://crawford.anu.edu.au/acde/publications/
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Ross McLeod, 2003.
"Towards improved monetary policy in Indonesia,"
Bulletin of Indonesian Economic Studies,
Taylor & Francis Journals, vol. 39(3), pages 303-324.
- Ross McLeod, 2002. "Toward Improved Monetary Policy in Indonesia," Departmental Working Papers 2002-10, The Australian National University, Arndt-Corden Department of Economics.
- Hadi Soesastro & M. Chatib Basri, 1998. "Survey of Recent Developments," Bulletin of Indonesian Economic Studies, Taylor & Francis Journals, vol. 34(1), pages 3-54.
- Colin Johnson, 1998. "Survey of Recent Developments," Bulletin of Indonesian Economic Studies, Taylor & Francis Journals, vol. 34(2), pages 3-59.
- Charles Enoch & Olivier Frecaut & Arto Kovanen, 2003. "Indonesia'S Banking Crisis: What Happened And What Did We Learn?," Bulletin of Indonesian Economic Studies, Taylor & Francis Journals, vol. 39(1), pages 75-92. Full references (including those not matched with items on IDEAS)
When requesting a correction, please mention this item's handle: RePEc:pas:papers:2003-05. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Sandra Zec)
If references are entirely missing, you can add them using this form.