THE EFFECTIVENESS OF MACROPRUDENTIAL POLICIES IN MITIGATING THE SYSTEMIC RISK IN INDONESIA

This study aims to investigate the effectiveness of macroprudential policies in mitigating the systemic risk in Indonesia. The study uses quantitative descriptive analysis with the Vector Error Correction Model (VECM) and emphasizes on the impact of two macroprudential instruments applied in Indonesia; Macroprudential Liquidity Buffer (MLB) and Countercyclical Capital Buffer (CCyB) to credit growth for conventional and financing growth for Sharia bank. This study employes monthly data over the periods M12010-M102019 that obtained from Bank Indonesia’s (BI) website (www.bi.go.di) and the data published monthly by Financial Service Authority (OJK); Indonesia Bank Statistic and Sharia Bank Statistic.The result indicates that MLB has a positive impact on credit growth and negative effect financing for Sharia Bank. Otherwise, CCyB shows the opposite results, where it has a negative effect on credit growth, while in the Sharia bank, CCyB has a positive effect. Therefore, it is sufficient to conclude that MLB has a capability to curb the systemic risk for Sharia bank, whereas CCyB is effective for conventional bank.

Determinant of Net Interest Margin Banking In Indonesia, During The Period 2009 - 20018

The purpose of this study is to examine the effect of Loan Growth, Unemployment, BOPO, CAR, Inflation, and Exchange Rate in relationship with Net Interest Margin. The research object used is banking data BUKU I to BUKU IV 2009-2018 published by Financial Service Authority, known as OJK. The analysis technique used is panel data regression analysis with Eviews 9.0 analysis tool. The results showed that the variables which consist of Loan Growth, and Unemployment had a significant positive effect on Net Interest Margin. Other independent variables, which consist of BOPO and Exchange Rate had a significant negative effect on Net Interest Margin. While CAR and Inflation do not show a significant impact on Net Interest Margin.

CEO Characteristics and Environmental Performance: Evidence from Indonesian Banks

Following the paradigm shift of company performance, from merely financial aspects to the balance between economics and environmental aspects, a study that explores the drivers of company environmental performance is indispensable. This study aims to empirically examine the role of CEO characteristics in determining the environmental performance from CEO's gender, age, expertise, and international experience in Indonesian banks. We use secondary data from banks' annual and sustainability reports that were analysed using panel data regression. The results demonstrate that CEO's international experience and education level positively affect bank's environmental performance while foreign CEO and CEO's abroad study exhibit negative effect. Our findings emphasise that CEO plays a great role in initiating banks' environmental activities. CEO's decision is crucial to adopt environmental practice that leads to better environmental performance. The study contributes to the Indonesian literature by providing empirical evidence of CEO factors in determining banks' environmental performance, in which there are very limited studies examining the role of CEO. We also suggest the Indonesian Financial Service Authority to encourage banks to deliver higher environmental contribution by maximizing the role of CEO.

General Insurance Subsector Financial Performance in 2020/2021: Does the Covid-19 Pandemic Matter?

This paper is aimed at analyzing the impact of the covid-19 pandemic on the performance of general insurance subsector in Indonesia. Secondary data obtained from the Indonesia Financial Service Authority which include annual growth rate (year on year) of total asset, technical reserve, investment, equity, and net premium income for the periods between April 2019, 2020 and 2021 to March 2019, 2020 and 2021 were used in this study. Using the dependent sample t-test, it is revealed that the impacts of the covid-19 pandemic on the performance of general insurance subsector were varied. The growth rates of the total asset, total investment, and net premium income of general insurance subsector significantly decreased during the covid-19 pandemic. The decline of these variables was influenced by the covid-19 pandemic. In the meantime, the growth rate of technical reserve and equity were not significantly influenced by the covid-19 pandemic. The growth rate of these variables decreases; however, the degree of decreases was not statistically significant. Findings of the study indicate that further study is required to examine in more detail the factors that potentially affect the performance of the general insurance subsector in relation to the covid-19 pandemic.

Banking credit restructuring in Indonesia: Quo vadis?

This research aims to analyze the impact of Coronavirus Disease (Covid-19) on the accounting practices in banks associated with Indonesian Financial Accounting Standards (PSAK) 71 – Financial Instrument, particularly the allowance for impairment losses (CKPN) to respond to the Indonesian Financial Service Authority's Regulation (POJK) Number: 11/POJK.03/2020 concerning credit restructuring program and quality assets assessment. The research methodology is triangulation. This study reveals that the restructuring program helps banks from a significant jump of weak quality credits. Banks need to analyze the recovery rate of debtors as a basis for the stage of PSAK 71 with the Expected Credit Loss approach. The higher the CKPN, the smaller the net income. Besides, a tremendous amount of CKPN will pressure the Capital Adequacy Ratio (CAR). Therefore, shareholders should increase the capital, or the Indonesian Financial Service Authority (OJK) forces the bank(s) into a merger or acquisition.

The Effect of Fraud Pentagon and F-Score Model in Detecting Fraudulent Financial Reporting in Indonesia

This study analyzes the effect of fraud pentagon and the efficacy of the F-score model in detecting fraudulent financial reporting in Indonesia. The sample used is the company’s annual report subject to Financial Service Authority (OJK) sanctions and a twofold comparative annual study from companies not subject to sanctions in the same reporting year and industry type. The sample was selected using a purposive sampling method. The data was analyzed using the logistic regression analysis. The test results prove that pressure, opportunity, and rationalization in the fraud pentagon can be used to detect bogus financial reporting. The results reveal that the F-score model is unsuitable for hypothesis testing; consequently, some variables should be eliminated. Therefore, the F-score model has limited usefulness in detecting counterfeit financial reporting in Indonesia. Keywords: F-Score, accounting fraud, fraud detection, fraud pentagon, fraudulent financial reporting

The Effects of Credit Growth on Risk and Performance of Conventional Banks in Indonesia

Indonesia is a developing country with a bank-based country structure. Credit is the largest component of banking assets. Credit growth with the low interest rates and low standard criteria for potential borrowers will have an impact on the credit risk faced by banks. The purpose of this study is to look into the effect of credit growth on the risk and performance of Indonesian conventional banks. This study uses dynamic panel data with the Generalized Method of Moment (GMM) approach. There are 3 hypotheses to be tested: first, the relationship between credit growth and credit risk using a credit loss approach. Second, the relationship between credit growth and bank profitability using a bank interest income approach. Third, the relationship between credit growth and bank solvency using the ratio of capital to assets. The data used in this study is taken from 93 conventional commercial banks registered with the Indonesia Financial Service Authority (Otoritas Jasa Keuangan) in the period of 2009-2019. The results showed that credit growth has a significant negative effect on credit risk and has a significant positive effect on the profitability and solvency of conventional commercial banks in Indonesia.

Pengaruh Karakteristik Dewan Pengawas Syariah Terhadap Tingkat Financial Soundness Bank Syariah di Indonesia Tahun 2015-2019

This study aims to examine the effect of Shari’ah Supervisory Board characteristics on financial soundness of Islamic banks in Indonesia. This research was conducted by quantitavie method and used data of Islamic banks listed in Financial Service Authority of Indonesia (OJK) at 2015-2019. Total sample was 13 islamic banks for each period. This research used RGEC method as main and newest measurement financial soundness of Indonesian banks. This research also used CAMEL method and Z-Score method as a robustness or additional test. Characteristics of Shari’ah Supervisory Board in this research represented by board size, multi-position, board education levels and meeting frequency.The result of this this study conclude that board size only affects financial soundness of Islamic banks from GCG mechanism and Cash Adequacy Ratio aspects. And multi positions of board will affects financial soundness of Islamic banks from Non Performing Financing, Return On Assets and Operational Expense Toward Operational Income aspects. While, board education levels didn’t have any significant impact on financial soundness of Indonesian Islamic banks in every aspects of RGEC method. And the meeting frequency only affects financial soundness of Indonesian Islamic banks from Operational Expense Toward Operational Income aspects. CAMEL method as the first robustness test showed that all of Shariah Supervisory Board characteristics didn’t have any significant impact on financial soundness of Indonesian Islamic banks while, the Z-Score as the second additional test found that only multi position which was give a significant impact on financial soundness of Indonesian Islamic banks.

Pengawasan terhadap Bank Tanah: Urgensi, Kewenangan, dan Mekanisme

The Omnibus Law for Job Creation establishes a special agency called the land bank agency that manages state land, including planning, acquisition, procurement, management, utilization, and distribution of land. This article revisits on how urgent this land bank is and how its supervisory powers and mechanisms are implemented. This article demonstrates that the formation of the land bank is actually related to problems in land acquisition, especially those intended for infrastructure development, which has triggered land liberalization and caused the increase of land price. Therefore, the land bank is urgent to ensure the availability of land for various development purposes in the future, budget efficiency, as well as to avoid conflicts in the land acquisition process and reduce the side effects of land liberalization. In order to encourage the land bank play its role and function as intended in its formation, good and efficient supervision is also needed. So far, it has been stated in the Omnibus Law for Job Creation that internal supervision is carried out by the supervisory board. Taking into account the relationship of the land bank and the supervisory board with other agencies or institutions that carry out the functions of land and bank as well as their supervision, like the one by the National Land Agency and the Financial Service Authority, it is necessary to have clarity on each role and function to avoid overlap. Abstrak UU Cipta Kerja membentuk badan khusus yang mengelola tanah, yaitu badan bank tanah, yang berfungsi melaksanakan perencanaan, perolehan, pengadaan, pengelolaan, pemanfaatan, dan pendistribusian tanah. Dalam artikel ini dibahas apa sebetulnya urgensi bank tanah ini dan bagaimana pula kewenangan dan mekanisme pengawasannya. Artikel ini memperlihatkan pembentukan bank tanah sebetulnya terkait dengan permasalahan dalam pengadaan tanah terutama yang diperuntukkan bagi pembangunan infrastruktur, sehingga memicu terjadinya liberalisasi tanah dan mengakibatkan harga tanah melambung tinggi. Karena itu, bank tanah urgen dalam rangka menjamin ketersediaan tanah untuk berbagai keperluan pembangunan di masa yang akan datang, efisiensi anggaran, serta mengurangi konflik dalam proses pembebasan tanah dan dampak buruk liberalisasi tanah. Dalam rangka mendorong agar bank tanah berperan dan berfungsi sebagaimana dikehendaki dalam pembentukannya, maka diperlukan pengawasan yang baik dan efisien pula. Sejauh ini dalam UU Cipta disebutkan pengawasan dilakukan secara internal oleh dewan pengawas. Dengan mempertimbangkan adanya keterkaitan bank tanah dan dewan pengawas ini dengan badan atau lembaga lainnya yang menjalankan fungsi pertanahan dan bank serta pengawasannya juga, misal Badan Pertanahan Nasional dan Otoritas Jasa Keuangan, maka adanya kejelasan terhadap masing-masing peran dan fungsi sangatlah diperlukan, agar tidak malah terjadi tumpang tindih.