Bulletin of Monetary Economics and Banking (BMEB) / Buletin Ekonomi Moneter dan Perbankan
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Foreign And Private Domestic Investments In Indonesia: Crowding-In Or Crowding-Out?
No full textThis study aims to investigate the empirical relationship between Foreign Direct Investment (FDI) to Private Domestic Investment (PDI) in Indonesia by using quarterly data from 1990Q2 to 2020Q2. It tests the crowding-in effect (which suggests complementarity between FDI and PDI) and crowding out effect (which indicates a substitution effect between FDI and PDI) at the sectoral level. Our results imply the prevalence of the crowding-in effect in the primary and secondary sectors, with the tertiary sector exhibiting a neutral relationship. No rational reason was observed for the restriction of foreign investment. Therefore, it is suggested that Indonesia’s government needs to actively engage in FDI to increase the growth of new investments in the primary and secondary sectors of the domestic economy
The Impact Of Domestic Investors’ Participation In Government Debt On Bank Loans To The Private Sector: A Cross-Country Study
No full textThis study analyzes the impact of domestic investors’ participation in government debt on bank loans to the private sector in advanced and emerging countries. We find that domestic bank participation in government debt has a more profound negative impact on bank loans to the private sector in advanced than in emerging countries. Meanwhile, domestic non-bank participation in government debt only negatively impacts bank loans to the private sector in emerging countries. While both domestic bank and non-bank participation in government debt have a negative impact on bank loans to the private sector in emerging countries, the latter has a weaker impact
STIMULATING ECONOMIC RECOVERY, PROMOTING SUSTAINABLE- INCLUSIVE GROWTH: CHALLENGES AND OPPORTUNITIES
No full textEDITORIA
PANDEMICS, LOCKDOWN AND ECONOMIC GROWTH: A REGION-SPECIFIC PERSPECTIVE ON COVID-19
No full textThis study examines the impacts of COVID-19 induced factors and country specific health-care infrastructure and co-morbid factors on economic growth between January 1, 2021, to May 31, 2021 for 19 South and South-east Asian (SSEA) economies. Our findings indicate that COVID-19 related mortality negates growth, while vaccination and testing have no significant impact on growth during this period. We further quantify the effects by instrumenting government policy measures and vaccination drives in terms of testing, tracking and mortality. Our findings show a negative effect of lockdowns on growth, while vaccination has a positive impact on growth and controls fatality rate considerably
DOES BANK EFFICIENCY ENHANCE BANK PERFORMANCE? EMPIRICAL EVIDENCE FROM INDIAN BANKING
No full textThis paper examines the effects of cost, revenue, profit efficiency, and stability inefficiency on bank profitability in India over the period 1997 to 2017. Additionally, this study examines the effect of efficiency on profitability for banks according to their ownership and for periods with (and without) the global financial crisis. The cost, revenue, and profit efficiency scores for 70 banks in India are estimated using stochastic frontier analysis. Our key findings are as follows. First, we find that cost, revenue and profit efficiencies positively influence the profitability conditions of Indian banks. Second, banks that are inefficient adversely influence bank performance, although the global financial crisis did not seem to impact the efficiency-profitability relationship. Finally, we find that bank ownership matters for the association between its efficiency and performance
Asymmetric Impacts Of Monetary Policy Shock On Output Gap: Evidence From Regions In Indonesia
No full textWe examine the impact of the monetary policy on regional output gaps across 33 Indonesian provinces. Heterogeneous regional responses of the output gap to monetary policy shock are captured using the Vector Autoregressive model. Moreover, the idiosyncratic variations across provinces accounted for different responses are observed with the spatial econometric model. The spatial analysis suggests that economic structure and financial depth positively and significantly determine the aforesaid asymmetric responses. On the other hand, economic size and trade openness have a negative impact on them
The Systemic Risk In The Gulf Cooperation Council Countries’ Equity Markets And Banking Sectors: A Dynamic Covar Approach
No full textThis paper examines the systemic risk and its spillover between banking sectors of the Gulf Cooperation Council (GCC) region using the conditional value-at-risk framework. We construct country-specific banking indices using 11 large banks in the region that are systemically important (SIB). We report evidence of systemic risk spillovers from SIBs to the broad-based GCC market indices. The incremental tail spillovers are statistically significant for other domestic banks’ tail risk and inflate the systemic risk of cross-country GCC bank
THE IMPACT OF FISCAL SPACE ON INDONESIA’S FISCAL BEHAVIOR
No full textThis study investigates the impact of fiscal space on the probability that the government of Indonesia will be able to implement counter-cyclical fiscal behavior. We use ordinary least squares and probit methods to estimate the fiscal policy reaction function. This study confirms that increasing fiscal space can increase the probability of the government to execute its counter-cyclical behavior policy. A proposal to increase the space includes generating alternative sources of government revenues from taxes and non-taxes and redesigning subsidies toward selected targeting recipients to reduce the non-discretionary part of the government budget
THE IMPACT OF COVID-19 ON DIGITAL PAYMENT HABITS OF INDIAN HOUSEHOLDS
No full textThe COVID-19 induced lockdown in India was an inflection point for on-boarding of new users into digital payments. Using a large survey dataset, we examine the driving factors of this shift for those who used digital payments for the first time. Apart from demographic drivers of payment choice traditionally explored in the literature, we find that this shift was significantly shaped by the degree of awareness of digital modes, access to smartphones and debit cards, and pandemic-relief welfare transfers. Users who had abandoned digital payments due to prior bad experience switched back to such modes
A REFLECTION OF SUSTAINABLE INCLUSIVE GROWTH POST-PANDEMIC AND THE CENTRAL BANK’S CHALLENGES BEYOND STABILITY
No full textLadies and Gentlemen, welcome to the 15th Bulletin of Monetary Economics and Banking (BMEB) International Conference and Call for Papers, 2-3 September 2021. As I recall from my speech at the 14th BMEB Conference in 2020, I am tremendously delighted to see the achievement of BMEB during the last few years. Moreover, since last year, the journal has been widely recognized as one of the most respected journals in Indonesia and the emerging market economies. Such recognition would surely not have been achieved without the BMEB’s role notably in providing outlets for outstanding research publications, and hence contributing to the ecosystem for competitive research both domestically and globally. I also recall mentioning last year that the COVID-19 pandemic calls for a reflection on the paths we have taken, to rethink our macroeconomy as we know it and put forward the practice of central banking in the New Normal. After over one and a half years of battling the pandemic, we have come to realize that this pandemic is unparalleled compared to other crises that we have experienced. The need for reflection has become ever more imminent as we look towards the horizon and ponder the recoveries needed in the face of this unprecedented, prolonged, and ironically, to some extent, recurrent pandemic.With that in mind, I am gratified to deliver my keynote address at this 15thBMEB International Conference