THE IMPACT OF GOVERNMENT’S REGULATION AMENDMENT REGARDING THE AMOUNT OF DEPOSIT GUARANTEED BY IDIC, TOWARDS INDONESIA’S BANKING INDUSTRY STABILITY

• Main Author: Amanina Puspitasari (19015061), Nadine
• Format: Final Project
• Language: Indonesia
• Online Access: https://digilib.itb.ac.id/gdl/view/29488
• Institution: Institut Teknologi Bandung

The objective of this research is to identify any significant impact from the policy amendment <br /> <br /> and macroeconomic factors towards Indonesia’s banking stability. <br /> <br /> In 1998 and 2008, Indonesia was struck by a financial crisis and resulted the decreasing of <br /> <br /> public trust towards the banking industry. To overcome these crises the government set the <br /> <br /> blanket guarantee scheme, which was replaced by limited guarantee system in 2005, and by <br /> <br /> changing the amount of money guaranteed by IDIC in one deposit account, which was set in <br /> <br /> Government Rule Number 66 year 2008. <br /> <br /> The data used in this research is obtained from Indonesia Central Bank, IDIC, and Indonesia <br /> <br /> Statistics Bureau. Since the data is historical time series data, the method used will be time <br /> <br /> regression analysis. This study then identifies a significant impact between policy <br /> <br /> amendment, that’s represented by time before and after the policy changing, towards banking <br /> <br /> stability. It also finds out a significant impact from interest rate and exchange rate towards <br /> <br /> banking stability index. While, according to previous study, Creel, Hubert, and Labondance <br /> <br /> (2014), financial instability has negative impact on GDP growth, this study didn’t show any <br /> <br /> significant impact between nominal GDP growth and banking stability index. Among the <br /> <br /> independent variables in this study, interest rate has the highest significance towards banking <br /> <br /> stability index.