The Government And Indonesian Central Bank

The effective control of cost of funds and operating and administrative expenses has resulted in continuously growing trend in profit margin. Both the slightly increasing in total assets turnover trend and highly growing trend in profit margin trend has resulted in continuously improving ROA (Return on Assets). The broadening of equity base and high retention ratio has resulted in growing trend in owner equity. The bank average collection period has dropped which shows the efficiency of the bank.

Greetings and salutations to the CEO of the organization. To help you interpret policies make by the Federal Reserve, I am here as an interpreter to help you understand the policies that are in place due to the natural disasters that have happened around the world. In October the Group of 30 International Banking had a seminar located in the nation’s capital. The consultation of the report will discuss the present status of where this country’s economy is and why the economy has been affected. This information allows us to determine the effects to the corporation’s state before and after.

The main goal of the 4 banks is to increase their tangible book value and earnings per share by increasing Net Interest Margin (NIM) via organic growth. There appears to be significant difference in the geographical locations where the global banks see growth and a national bank such as Valley National Bank sees future growth prospects. There is also parity in all 4 banks opinions as to where the fastest growing economic sectors tend to

The word “Indonesia” has two Greek words and meaning in it. “Indos” means Indian and Nesos mean “Islands”. According to the Embassy of Indonesia, the whole country is made up of 17,508 islands. However, like the islands scattered everywhere, Indonesia seems to have a “messy” government. The government of Indonesia has started after decolonization from the Dutch, which is called the “Unitary State of the Republic of Indonesia” starting from 1945. The structure of the Indonesian government seems very similar to the one of U.S. It has an executive, judicial, and and legislative branch. Just like the US government, Indonesia has political representation, bureaucratic organization, judicial system, and law enforcement. However, following the reforms of the government, the Indonesian government is not stable and is apprehensive in taking the government forward.

The key earnings measurements of SDB are ROAA (net income/average total assets) and ROAE (net income/average equity). ROAA is called return on average asset. It is an indicator shows how much bank earns as a percentage of total assets. ROAE is an indicator for return on equity. And From 2000 to 2002, the SDB’ s ROAA and ROAE are decreasing over time. Based on Exhibit 10 (Jin, Xuan, & Bai, 2009), the average ROAA for industry peers is 0.6%, higher than SDB’S ROAA, which is 0.3%. The average ROAE for industry peers is 26.8%, which is much higher than 9.1% for SDB. These data shows SDB is not a profitable bank as the profitability of both bank’s total assets and average equity are lower than industry peers. Moreover, the overall financial performance of SDB is worse compare with its industry peers. This is because not only the ROAA and ROAE are lower than other banks but also other measure of firm earning capability are performing poor than industry peers. For example, the Operating expense/Operating income ratio for average industry peers is 55.3% and for SDB is 58.3% (Jin, Xuan, & Bai, 2009). Which means for every operating income SDB generated, it has to spend more than others.

I successfully published a paper on “Labor Market Flexibility and the Impact of the Financial Crisis” in Kyklos, a high-quality journal in political economics. In addition, my paper on “Legal and Actual Central Bank Independence: A case study of Bank of Indonesia” was published in the SOM Research Report. Following these publications, another paper that I wrote entitled, “Financial Crises and the Dismissal of Central Bank Governors: New Evidence” was also published in the International Journal of Finance and Economics. In order to the increase the impact of my paper to the academics and policy makers, I presented my paper on financial crisis and central bank independence at the Forum Kebijakan Pembangunan (FKP) held by the ANU Indonesia Project. I was also invited by the Asian Economic Panel (AEP) Conference to present my paper on Bank Indonesia’s legal and actual

In this system, conventional banks make profit through the different rates of interest by borrowing and lending of money. However, one of the drawbacks of conventional banking is that it is prohibited from trading in the shareholding of the borrowing concern. (Shahid H. , et al., 2010). The performance of all the banks in the country may not necessarily be on the positive side especially since the recent financial crisis of 2007. Banks have managed to pull through but not without some being injured in terms of stock prices or profits. In 2002, the Malaysian government started the implementation of the banking sector reformation in respond to the 1997 financial crisis. Under the reform plan, Malaysian government guided the merger activities in the banking sector through the central bank. Prior to that date, the banking sector was made up of 54 domestic deposit taking institutions which became ten large-capitalized banks by the end of 2002. (Ahmad, Ariff, & Skully,

This chapter is about the background of 2007-2008 financial crisis. The 2007-2008 financial crisis has a huge impact on US banking system and how the banks operate and how they are regulated after the financial turmoil. This financial crisis started with difficulty of rolling over asset backed commercial papers in the summer of 2007 due to uncertainty on the liquidity of mortgage backed securities and questions about the soundness of banks and non-bank financial institutes when interest rate continued to go up at a faster pace since 2004. In March 2008 the second wave of liquidity loss occurred after US government decided to bailout Bear Stearns and some commercial banks, then other financial institutions took it as a warning of financial difficulty of their peers. In the meantime banks started hoarding cash and reserve instead of lending out to fellow banks and corporations. The third wave of credit crunch which eventually brought down US financial system and spread over the globe was Lehman Brother’s bankruptcy in August 2008. Many major commercial banks in US held structured products and commercial papers of Lehman Brother, as a result, they suffered a great loss as Lehman Brother went into insolvency. This panic of bank insolvency caused loss of liquidity in both commercial paper market and inter-bank market. Still banks were reluctant to turn to US government or Federal Reserve as this kind of action might indicate delicacy of

In the period between 1997 to 1998, a great economic storm blew the some fast-developing countries, especially Thailand, Indonesia and Malaysia. They had great economic development before the crisis, but left almost everything at the end of the storm. The most obvious impact of the crisis is the capital outflows and currency devaluation. So, people in those developing countries began to find who should be responding to the crisis. International speculators were appropriate targets to be blamed due to their actives during the crisis. The President of Indonesia, Suharto, even claimed “There are [parties] trying to engineer the fall of the rupiah to the 20,000 level [against the dollar]. It

Those capital directly or indirectly affect the stock and estate market that result in house price and stock rose sharply. Then bubble economy is formed. At the same time, the production cost increased and make investment environment got worse. Thai Baht was depreciated greatly, the unemployment rate increased and then economic recession. On November 1997, South Korean also get the influence on their exchange currency. Moreover, lots of banks and security companies went bankrupt in Japan. At this point, Asian financial crisis started. At the second stage, in Indonesia, financial crisis broke out again in 1998. They faced the most serious economic recession in their history. The International Monetary Funds had made a strategy to deal with it to help Indonesia, but failed to achieve the desired results. Indonesia government have to implemented a new monetary policy, yet International Monetary Funds and America against it. Indonesia have a big trouble on Political and economy: sharply fall in exchange rate, interest rate volatile, inflation increase rapidly and government deficit increase and so on. After the crisis spread to Japan, Japanese yen also depreciated. And the problem of financial became more serious. Many large industries were forced shut down. At the last stage of crisis, a increasing number of countries got the economic problem. International speculator George Soros is a currency speculator and stock

Indonesian Economy has seen drastic changes in the last two decades. Currently Indonesia is South East Asia’s largest economy and one of the emerging economies in the world. Indonesia is ranked the 18th largest economy in the world. Looking at the history, the Indonesian economy was deteriorating and was in crisis in the

A vibrant and efficient financial system is one of the key factors of a sustainable economy. Previous studies discuss an informal link between the level of financial intermediation and economic development. Therefore, financial intermediation provided by banks plays a vital role in the economic growth. Interest rate spread (IRS), which is basically the difference between lending rate and deposit rate in terms of banks’ average assets, is the main tool that is used to measure the financial intermediation efficiency. One of the expectations of the financial deepening and deregulation is to narrow the banks’ IRS.

Prior to the crisis, a common compromise emerged about the function and position of the CBs. Although the CBs’ primary objective is to maintain price stability, as the need arises, a CB is seen to play roles that may be inconsistent with its core goal. However, these actions of the CBs may be necessary for banking stability in the country. These may include bailing out the insolvent banks, managing the government’s financial transactions, financing budget deficits through the issuance of money, and financing the development projects undertaken by the government (Cukierman et al., 1992). All of these tasks influence the stability of the banking sector directly or indirectly and thus are also related to a banking crisis. The instability of the banking sector can be influenced both in the short and long run.

Most of Asian countries have a central bank (or monetary authority) that conducts monetary policy to pursue a single or multiple objectives. The primary objective is to maintain price stability, however for banking stability in the country, a CB could do some tasks that may be inconsistent with its core goal. These may include bailing out the insolvent banks (Cukierman, Webb, and Neyati, 1994). All of the tasks influence the stability of the banking sector directly or indirectly and thus are also related to a banking crisis.

Meezan bank, the very foremost Islamic bank of Pakistan, is evaluated against a collection of 5 conventional banks, in terms of their performance. Performance is determined from the angles of profitability, liquidity, and efficiency