The Effect of Competition Level and Banking Concentration to Systemic Risks: Indonesia Case
| Main Author: | Buddi Wibowo; University of Indonesia |
|---|---|
| Format: | Article eJournal |
| Bahasa: | eng |
| Terbitan: |
Management Research Center, Department of Management, Faculty of Economics and Business, U
, 2017
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| Subjects: | |
| Online Access: |
http://journal.ui.ac.id/index.php/icmr/article/view/7138 |
Daftar Isi:
- This article analyzes relationship between Indonesian banking competition, concentration, and systemic risk with characteristics of individual bank and state variable as control variables. This article uses Panzar–Rosse Model and Concentration Ratio to measure banking competition and concentration and CoVaR for systemic risk measurement. The empirical result shows concentration and competition increase the systemic risk. This means increasing competition leads banks to take higher risks (competition-fragility) and banks with high market power tends to charge higher interest rate thus increasing systemic risk (concentration-fragility). Net Interest Margin as control variable is statistically significant for both models. This shows further support. Size and interbank deposit ratio are significant, meanwhile, profitability, capital structure, and demand deposit to total funding ratio are not significant.