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Control and Competition: Banking Deregulation and Re-regulation in Indonesia

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  • Ross H. McLeod

Abstract

Policy changes in Indonesian banking from 1983 through 1990 saw the removal of controls on interest rates, lending, and expansion of branch networks, and of barriers to entry. The dismantling of loan subsidy programmes financed by the central bank ran in parallel with these changes. Private banks have been enabled to erode rapidly the market share of the previously dominant, but less efficient and less customeroriented, state banks. Despite the impressive progress resulting from these reforms, however, interventionist policy has been making a comeback during the 1990s, and the central bank still maintains its role as a significant supplier of subsidised loans.
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Suggested Citation

  • Ross H. McLeod, 1996. "Control and Competition: Banking Deregulation and Re-regulation in Indonesia," Trade and Development 96/7, Australian National University, Department of Economics.
  • Handle: RePEc:wop:anuetd:9607
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    File URL: http://coombs.anu.edu.au/~ecopac/wpaper/wp1996/967.prn
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Ross McLeod, 1999. "Crisis-Driven Changes to the Banking Laws and Regulations," Bulletin of Indonesian Economic Studies, Taylor & Francis Journals, vol. 35(2), pages 147-154.
    2. Ross H. McLeod, 2002. "Second and Third Thoughts on Privatisation in Indonesia," Agenda - A Journal of Policy Analysis and Reform, Australian National University, College of Business and Economics, School of Economics, vol. 9(2), pages 151-164.
    3. Prasetyantoko, A. & Rosengard, Jay K., 2011. "If The Banks Are Doing So Well, Why Can’t I Get A Loan? Regulatory Constraints to Financial Inclusion in Indonesia," Scholarly Articles 8705903, Harvard Kennedy School of Government.
    4. Gregory James & Michail Karoglou, 2010. "Financial liberalization and stock market volatility: the case of Indonesia," Applied Financial Economics, Taylor & Francis Journals, pages 477-486.
    5. George Fane & Ross H.McLeod, 2002. "Banking Collapse and Restructuring in Indonesia, 1997-2001," Cato Journal, Cato Journal, Cato Institute, vol. 22(2), pages 277-295, Fall.
    6. McLeod, Ross, 2002. "Privatisation Failures in Indonesia," Departmental Working Papers 2002-06, The Australian National University, Arndt-Corden Department of Economics.
    7. Ross H McLeod, 2003. "Rethinking vulnerability to currency crises: Comments on Athukorala and Warr," Departmental Working Papers 2003-11, The Australian National University, Arndt-Corden Department of Economics.

    More about this item

    JEL classification:

    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • 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
    • O23 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Fiscal and Monetary Policy in Development

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