TY - JOUR
T1 - Income volatility of Indonesian banks after the Asian Financial Crisis
AU - Williams, Barry
PY - 2013/5
Y1 - 2013/5
N2 - This paper considers the factors that determine Indonesian bank risk both before and after the Asian Financial Crisis (AFC). In the pre-AFC period, bank capital holdings are positively associated with bank revenue risk, which is attributed to a combination of regulatory laxity as well as laxity of enforcement. In the post-AFC period, capital is found to reduce bank risk in a non-linear manner. Franchise value is associated with lower bank risk, but in a non-linear manner; low levels of franchise value are associated with increased bank risk, while higher levels of franchise value result in lower bank risk. It is also concluded the low-to-medium levels of bank loan growth are associated with lower bank risk; however, high levels of loan growth are risk increasing. These results point to the importance of enforcement of regulatory oversight in reducing bank risk.
AB - This paper considers the factors that determine Indonesian bank risk both before and after the Asian Financial Crisis (AFC). In the pre-AFC period, bank capital holdings are positively associated with bank revenue risk, which is attributed to a combination of regulatory laxity as well as laxity of enforcement. In the post-AFC period, capital is found to reduce bank risk in a non-linear manner. Franchise value is associated with lower bank risk, but in a non-linear manner; low levels of franchise value are associated with increased bank risk, while higher levels of franchise value result in lower bank risk. It is also concluded the low-to-medium levels of bank loan growth are associated with lower bank risk; however, high levels of loan growth are risk increasing. These results point to the importance of enforcement of regulatory oversight in reducing bank risk.
UR - http://www.scopus.com/inward/record.url?scp=84876064986&partnerID=8YFLogxK
U2 - 10.1080/13547860.2013.778159
DO - 10.1080/13547860.2013.778159
M3 - Article
AN - SCOPUS:84876064986
SN - 1354-7860
VL - 18
SP - 333
EP - 358
JO - Journal of the Asia Pacific Economy
JF - Journal of the Asia Pacific Economy
IS - 2
ER -