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Bulletin of Monetary Economics and Banking

Document Type

Article

Abstract

This paper analyzes the relationship between banking competition and banking stability in Indonesia, where the bank lending is the major source of funding on this country with a series of structural changes including deregulation, economic crisis, and consolidation. We apply generalized method of moment approach on individual bank data, and the result shows that competitive banking will increase the economic stability. Under a competitive industry, banks must improve their efficiency, increase their loans disbursement, diversify their business, boost their assets and enhance their capitalization. This paper emphasize that the efficiency is a critical to reduce risk, both for large and small banks. Furthermore, regardless their size, an adequate capital is an important factor for the bank to cope with shocks in the market

First Page

333

Last Page

350

Creative Commons License

Creative Commons Attribution-NonCommercial 4.0 International License
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License

Country

Australia

Affiliation

University of Canberra

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