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Premi Penjaminan Simpanan Berbasis Risiko: Studi Kasus LPS Indonesia
[Risk-Based Deposit Insurance Premium: A Case Study of Indonesia Deposit Insurance Corporation (IDIC)]

Author

Listed:
  • Nizar, Muhammad Afdi
  • Mansur, Alfan

Abstract

This research aims to: (i) identify banking performance indicators that can potentially become the basis for risk-based deposit insurance premium in Indonesia, (ii) estimate risk-based deposit insurance rates for individual banks; and (iii) approximate the incurred costs of premium for individual banks. The results show that a number of banking performance indicators that can be used as the basis for risk-based deposit insurance premium encompass such as capital adequacy ratio (CAR), loan to deposit ratio (LDR), non-performing loans, (NPL), and cost to income ratio (CIR). CAR poses the largest weight of 48.48 per cent. Another result estimates the risk-based deposit insurance rates for individual banks ranging from 0.200 to 0.352 per cent per annum. The other result reveals that big banks do not always have a better risk management compared to small banks. Also, banks with a good risk management, indicated by low scores in this research, will burden the same premium costs either based on risk-based scheme or the current flat rate scheme.

Suggested Citation

  • Nizar, Muhammad Afdi & Mansur, Alfan, 2019. "Premi Penjaminan Simpanan Berbasis Risiko: Studi Kasus LPS Indonesia
    [Risk-Based Deposit Insurance Premium: A Case Study of Indonesia Deposit Insurance Corporation (IDIC)]
    ," MPRA Paper 97894, University Library of Munich, Germany, revised 31 Dec 2019.
  • Handle: RePEc:pra:mprapa:97894
    as

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    File URL: https://mpra.ub.uni-muenchen.de/97894/1/MPRA_paper_97894.pdf
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    References listed on IDEAS

    as
    1. Russell Cooper & Hubert Kempf, 2016. "Deposit insurance and bank liquidation without commitment: Can we sleep well?," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 61(2), pages 365-392, February.
    2. Anginer, Deniz & Demirguc-Kunt, Asli & Zhu, Min, 2014. "How does deposit insurance affect bank risk? Evidence from the recent crisis," Journal of Banking & Finance, Elsevier, vol. 48(C), pages 312-321.
    3. Franklin Allen & Elena Carletti & Agnese Leonello, 2011. "Deposit insurance and risk taking," Oxford Review of Economic Policy, Oxford University Press, vol. 27(3), pages 464-478.
    4. Guizani, Brahim & Watanabe, Wako, 2016. "The effects of public capital infusions on banks’ risk-shifting to the deposit insurance system in Japan," Journal of Financial Stability, Elsevier, vol. 26(C), pages 15-30.
    5. Chernykh, Lucy & Cole, Rebel A., 2011. "Does deposit insurance improve financial intermediation? Evidence from the Russian experiment," Journal of Banking & Finance, Elsevier, vol. 35(2), pages 388-402, February.
    6. Edward Simpson Prescott, 2002. "Can risk-based deposit insurance premiums control moral hazard?," Economic Quarterly, Federal Reserve Bank of Richmond, issue spr, pages 87-100.
    7. Demirgüç-Kunt, Asli & Kane, Edward J. & Laeven, Luc, 2008. "Determinants of deposit-insurance adoption and design," Journal of Financial Intermediation, Elsevier, vol. 17(3), pages 407-438, July.
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    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    flat rate; deposit insurer; premium; banking restructuring; banks’ risk; risk-based;

    JEL classification:

    • C12 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Hypothesis Testing: General
    • C54 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Quantitative Policy Modeling
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General

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