In Indonesia, the disciplinary role of private agents was not paid much atten-tion until the fi nancial crisis. This lack of attention was probably due to the insufficient and inadequate financial disclosure of listed companies. After the crisis, the government and supervisory agencies became very heavily in-volved in restructuring the banking sector and enforcing discipline through an array of new detailed regulations and codes. Depositors seem to have ef-fectively implemented discipline on banks right after the crisis, as they were shifting their deposits from perceived unhealthy banks to sound banks. Since the blanket deposit guarantee was introduced, however, depositors have become more passive in their disciplining role. Our analyses show some evidence that bank shareholders have played a disciplining role in Indonesia, even though creditors do not seem to play such a role.
As the economy fully recovers from the shock of the crisis, market forces can be expected to take over much of the disciplining role of the govern-ment, which put in place the necessary regulations after the crisis. There are already clear signs of increased competition in the banking services markets.
The government, in its Banking Architecture framework, aims to encourage the markets to enhance their disciplining role, starting in 2005, when the current blanket guarantee system is phased out. This will probably lead to further rationalizations in the banking industry.
Model Summary
Predictors: (Constant) CAR, Interest, Private, Govment
R Square 0.209780381
Adjusted R Square -0.015996654 Std. Error of the Estimate 114.8598065 ANOVA
Source Sum of
Squares
df Mean Square F Sig.
Regression 49032.1861 4 12258.04653 0.929148447 0.474964575 Residual 184698.852 14 13192.77514
Total 233731.038 18
Predictors: (Constant) CAR, Interest, Private, Govment Dependent Variable: depositgrw
Coeffi cients
Unstandardized Coeffi cients
Standardized Coeffi cients
t Sig.
B Std. Error Beta
(Constant) 56.51165 163.9504 0.344687 0.735452
Govment 191.6418 137.9662 0.630051 1.389048 0.186518 Private 24.52497 121.6064 0.090146 0.201674 0.843071 Interest 0.160710 2.909500 0.014918 0.055236 0.956730
CAR 0.973992 0.954306 0.339303 1.020629 0.324744
Dependent Variable: depositgrw
Notes : Calculation using the Enter Method Missing values substituted with mean
Dummy variables of ownership: government (Govment=1 and Private=0), private (Govment=0 and Private=1), and foreign (Govment=0 and Private=0).
Model Summary
Predictors: (Constant) CAR, Private, Interest, Govment
R Square 0.293255532
Adjusted R Square 0.158637538 Std. Error of the Estimate 15.90723289 ANOVA
Source Sum of
Squares
df Mean Square F Sig.
Regression 2204.917624 4 551.2294061 2.17842744 0.106617522 Residual 5313.841222 21 253.0400582
Total 7518.758846 25
Predictors: (Constant) CAR, Private, Interest, Govment Dependent Variable: depositgrw
Coeffi cients
Unstandardized Coeffi cients
Standardized Coeffi cients
t Sig.
B Std. Error Beta
(Constant) 17.13564 23.18411 0.739111 0.468020
Govment -7.435341 14.50374 -0.21271 -0.512649 0.613546 Private 6.415717 16.17124 0.18807 0.396736 0.695564 Interest 0.641554 3.070121 0.05300 0.208967 0.836487 CAR -0.582417 0.340421 -0.31929 -1.710868 0.101838 Dependent Variable: depositgrw
Notes: See notes of the table in Appendix 1.
Model Summary
Predictors: (Constant) NPL, Interest, ROE, CAR, Govment, ROA, Private
R Square 0.62384356
Adjusted R Square 0.477560501 Std. Error of the Estimate 12.53490584 ANOVA
Source Sum of
Squares
df Mean Square F Sig.
Regression 4690.529288 7 670.0756126 4.264632973 0.006118 Residual 2828.229558 18 157.1238643
Total 7518.758846 25
Predictors: (Constant) NPL, Interest, ROE, CAR, Govment, ROA, Private Dependent Variable: depositgrw
Coeffi cients
Unstandardized Coeffi cients
Standardized Coeffi cients
t Sig.
B Std. Error Beta
(Constant) 6.9994717 19.51227 0.358721 0.7239
Govment -10.887029 13.01798 -0.3114652 -0.836307 0.4139 Private -2.9687854 13.68716 -0.0870309 -0.216902 0.8307 Interest 1.9450308 2.490827 0.1606982 0.780877 0.4450 ROA -1.1350522 3.859732 -0.0988197 -0.294075 0.7720 ROE 0.1515179 0.219556 0.2327542 0.690110 0.4989 CAR -0.1683402 0.329364 -0.0922889 -0.511105 0.6154 NPL -0.6255389 0.173596 -0.6137789 -3.603398 0.0020 Dependent Variable: depositgrw
Notes: See notes of the table in Appendix 1.
Model Summary
Predictors: (Constant) NPL, Private, CAR, Govment
R Square 0.170578506
Adjusted R Square -0.066399064 Std. Error of the Estimate 63.68954085 ANOVA
Source Sum of
Squares
df Mean Square F Sig.
Regression 11679.20526 4 2919.801315 0.719808654 0.592479639 Residual 56789.00658 14 4056.357613
Total 68468.21184 18
Predictors: (Constant) NPL, Private, CAR, Govment Dependent Variable: liability
Coeffi cients
Unstandardized Coeffi cients
Standardized Coeffi cients
t Sig.
B Std. Error Beta
(Constant) 25.11239 72.57637 0.346013 0.734477
Govment -8.333131 75.61153 -0.050618 -0.110209 0.913807 Private 26.69457 67.89826 0.181291 0.393155 0.700126
CAR 0.404501 0.588830 0.260355 0.686956 0.503331
NPL 0.871909 1.039130 0.254911 0.839076 0.415524
Dependent Variable: liability
Notes: See notes of the table in Appendix 1.
Model Summary
Predictors: (Constant) NPL, private, CAR, Govment
R Square 0.31456124
Adjusted R Square 0.184001476 Std. Error of the Estimate 14.93507291 ANOVA
Source Sum of
Squares
df Mean Square F Sig.
Regression 2149.663772 4 537.4159431 2.409327578 0.08155141 Residual 4684.184462 21 223.056403
Total 6833.848235 25
Predictors: (Constant) NPL, Private, CAR, Govment Dependent Variable: liabltGrw
Coeffi cients
Unstandardized Coeffi cients
Standardized Coeffi cients
t Sig.
B Std. Error Beta
(Constant) 2.896152 11.95379 0.242278 0.810914
Govment -6.786140 11.80030 -0.20364 -0.575081 0.571346 Private 4.809442 11.32624 0.14788 0.424628 0.675426
CAR 0.493071 0.338765 0.28353 1.455494 0.160319
NPL -0.371570 0.196030 -0.38241 -1.895475 0.071877 Dependent Variable: liabltGrw
Notes: See notes of the table in Appendix 1.
Model Summary
Predictors: (Constant) NPL, ROA, private, CAR, ROE, Govment
R Square 0.38152426
Adjusted R Square 0.186216131 Std. Error of the Estimate 14.91479192 ANOVA
Source Sum of
Squares
df Mean Square F Sig.
Regression 2607.27889 6 434.5464817 1.953447934 0.123748 Residual 4226.569344 19 222.4510181
Total 6833.848235 25
Predictors: (Constant) NPL, ROA, Private, CAR, ROE, Govment Dependent Variable: liabltGrw
Coeffi cients
Unstandardized Coeffi cients
Standardized Coeffi cients
t Sig.
B Std. Error Beta
(Constant) 9.988792 12.93107 0.772464 0.4493
Govment -17.43101 14.02447 -0.523074 -1.242899 0.2290 Private -3.450620 12.88135 -0.106104 -0.267877 0.7916 ROA -1.003536 3.730507 -0.091643 -0.269007 0.7908
ROE 0.236019 0.215664 0.380295 1.094380 0.2874
CAR 0.498639 0.367035 0.286740 1.358558 0.1901
NPL -0.402989 0.214992 -0.414754 -1.874437 0.0763 Dependent Variable: liabltGrw
Notes: See notes of the table in Appendix 1.
Architecture Bank EXIM : Bank Expor Impor
BAPEPAM : Badan Pengawas Pasar Modal, The Capital Market Supervisory Agency
BAPINDO : Bank Pembangunan Indonesia
BBD : Bank Bumi Daya
BCA : Bank Central Asia
BDNI : Bank Dagang Nasional Indonesia
BI : Bank Indonesia, The Central Bank of Indonesia BII : Bank Internasional Indonesia
BLBI : Bantuan Likuiditas Bank Indonesia, Bank Indonesia Liquidity Assistance Loan
BoC : Board of Commissioners BoD : Board of Directors BRI : Bank Rakyat Indonesia BTO : Bank Takeover BUN : Bank Umum Nasional CAR : Capital Adequacy Ratio CEO : Chief Executive Offi cers ERM : Enterprise Risk Management GMoS : General Meeting of Shareholders GOI : Government of Indonesia
IBRA : Indonesian Bank Restructuring Agency IDR : Indonesian Rupiah
IMF : International Monetary Fund JSX : Jakarta Stock Exchange
KLD : Kredit Likuiditas Darurat, Emergency Liquidity Credit LDR : Loan to Deposit Ratio
LLL (3L) : Legal Lending Limit
LPS : Lembaga Penjamin Simpanan, Deposit Insurance Company
MOF : Ministry of Finance
MRA : Master of Restructuring Agreement
OECD : Organization for Economic Cooperation and Development OJK : Otoritas Jasa Keuangan, Financial Supervisory Authority OPT : Operasi Pasar Terbuka, Open Market Operation
PT : Perusahaan Terbatas, Limited Liability Company ROA : Return on Assets
ROE : Return on Equity
SBI : Sertifi kat Bank Indonesia, Bank Indonesia Certifi cate SBPU : Surat Berharga Pasar Uang, Money Market Securities SOEs : State-owned Enterprises
SOL : Subordinated Loan
UP3 : Unit Pelaksana Penjaminan Pemerintah
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