Did the Establishment of the Indonesia Deposit Insurance Corporation (IDIC) Significantly Impact the Performance of Indonesian Banking Industry?

2012 ◽  
Author(s):  
Muyanja Ssenyonga Jameaba
Keyword(s):  
Deposit Insurance ◽  
Banking Industry

scholarly journals FDICIA and Risk Shifting 1n the Banking Industry

2006 ◽  
Vol 7 (1) ◽  
pp. 87-116
Author(s):  
Seok-Weon Lee
Keyword(s):  
Moral Hazard ◽  
Risk Taking ◽  
Deposit Insurance ◽  
Banking Industry ◽  
Systematic Risk ◽  
Full Sample ◽  
Risk Taking Behavior ◽  
Federal Deposit Insurance ◽  
Asset Size ◽  
The U.S

This is an empirical study that examines how the Federal Deposit Insurance Corporation Improvement Act (FDICIA) of 1991 in the U.S. banking industry affects the moral hazard risk-taking incentives of banks. We find that FDICIA appears to be effective in significantly reducing the systematic risk-taking incentives of the banks. Considering that the banks' asset portfolios are necessarily largely systematic risk-related, the significant decrease in their systematic risk-taking incentives provides some evidence of the effectiveness of FDICIA. However, with respect to the nonsystematic risk-taking behavior, the results generally indicate statistically insignificant decreases in the risk-taking incentives after FDICIA. To well-diversified investors who can diversify nonsystematic risk away, nonsystematic risk may not be a risk any more. However, to maintain a sound banking environment and to reduce the risk to individual banks, this result implies that regulatory agents should monitor the banks’ nonsystematic risk-taking behavior more closely, as long as it is positively related to the banks’ failures. We further test the change in the risk-taking incentives by partitioning the full sample into two groups: Banks with higher moral hazard incentives as those with larger asset size and lower capital ratio and banks with lower moral hazard incentives as those with smaller asset size and higher capital ratio. The main result for this test is that, with FDICIA, the decrease in the risk-taking incentives of the banks with higher moral hazard incentives (larger asset-size and lower capital-ratio banks) is less than that of the banks with lower moral hazard incentives (smaller asset-size and higher capital-ratio banks), with respect to both systematic and nonsystematic risk-taking measures. Furthermore, the change in the nonsystematic risk-taking incentives of the banks with higher moral hazard incentives is rather mixed, while their systematic incentives are decreased. These findings imply that the regulatory agents should allocate more time and effort toward monitoring the banks with higher moral hazard incentives with particular emphasis on their nonsystematic risk-taking behavior.

KAJIAN HUKUM MENGENAI PERANAN LPS DALAM PENJAMINAN DANA NASABAH PADA PERBANKAN DI INDONESIA

2017 ◽  
Vol 3 (2) ◽  
pp. 46
Author(s):  
Erna Susanti
Keyword(s):  
Economic Growth ◽  
Deposit Insurance ◽  
Banking Industry ◽  
Banking System ◽  
Equal Protection ◽  
Investment Strategies ◽  
Public Funds ◽  
Safety And Health ◽  
Effective System ◽  
The Government

Undang-undang Nomor 10 Tahun 1998 tentang Pemerintah Daerah mandates the establishment of a LPS (Deposit Insurance Agency) as the executor of the guarantee of public funds. one approach is needed separately to build a healthy banking system and strong is to give customers assurance that eksplisif for storage. LPS can function regulate safety and health of banks in general and conduct oversight by monitoring the balance, the practice of lending and investment strategies. In establishing a permanent guarantor institutions needed reform measures of the banking system as a prerequisite for effective system. Two basic reasons for the government to facilitate the establishment of LPS is the belief in the banking industry is very important for economic growth and the banking system is well controlled to minimize the occurrence of bank insolvency, and bankruptcy itself can be predicted and is an event that can be prevented. Also crucial is also a consideration equal protection of small customers from bankers who are not responsible is an approach that is fair and appropriate. In such conditions the bank can operate in a consistent and reliable to provide credit in the amount sufficient for the health of the economy.

scholarly journals FRAUDS AND FORGERIES ON THE PERFORMANCE OF THE NIGERIAN BANKING INDUSTRY

2018 ◽  
Vol 1 (1) ◽  
pp. 61-68
Author(s):  
Abdullahi Shehu ARAGA ◽  
Sufian Babatunde JELILI
Keyword(s):  
Deposit Insurance ◽  
Banking Sector ◽  
Banking Industry ◽  
Bank Performance ◽  
Regulatory Body ◽  
Ex Post ◽  
Small Measure ◽  
Ex Post Facto ◽  
Policies And Programs ◽  
Nigerian Banking

This study focused on Frauds and Forgeries and the Performance of the Nigerian Banking Industry. The research method adopted is the Ex-Post-facto method. Data were sourced from the various publications of the CBN Statistical Bulletins and the Nigeria Deposit Insurance Corporation (NDIC)Publications. These data were analyzed using regression analysis. The period for this study covered between 1994 and 2016. The study established that: the number of reported frauds and forgeries cases has a significant positive on bank performance in Nigeria, the total amount involved in frauds has negative sign and is a significant determinant of the level of bank performance in Nigeria in the period under investigation and the actual losses to frauds does not have significant impact on bank performance in Nigeria. Based on the above findings, the following recommendations are proffered. Accurate and timely reportage of cases of frauds and forgeries activities in the banking sector should be vigorously pursued by bank’s management and regulatory body in Nigeria. This will in no small measure help to reduce and scare from fraudsters and prospective fraudsters from engaging in bank’s fraudulent activities. Finally, in view of the observed inverse relationship between frauds and the performance of the Nigerian banking industry, deliberate efforts with respect to appropriate policies and programs should be made by the respective regulatory authorities in the country to help curtail the incidences of bank related frauds and forgeries.

scholarly journals Firm size, corporate leverage and corporate dividend: Evidence from Korean banking industry.

2009 ◽  
Vol 6 (4) ◽  
pp. 317-322
Author(s):  
Seok Weon Lee
Keyword(s):  
Panel Data ◽  
Firm Size ◽  
Risk Taking ◽  
Deposit Insurance ◽  
Banking Industry ◽  
Protection System ◽  
High Profit ◽  
Risk Characteristics ◽  
Interaction Variables ◽  
Asset Size

This paper examines how the dividend policy of banks is associated with the level of safety of the banks. As the proxy for the safety of the bank, we employ the asset size and leverage measures. Considering that the explicit protection system of deposit insurance backing up the banking industry is prevailing and implicit forbearance policy practiced by the banking regulators generally would not allow the failure of especially large banks, the banks with larger asset size, other things being equal, would be considered safer than smaller banks. Also, following the implications of finance literature, higher leverage is believed to represent higher riskiness and the firms in higher leverage positions would have greater risk-taking incentives to maximize potential upward gains from high profit. From the panel data of Korean banks during 1994-2005, we find that the banks in a safer position significantly pay more dividends. That is, the banks with larger asset size and lower leverage tend to pay more dividends. In the tests employing partitioned samples and interaction variables for risk characteristics, we find more transparent and consistent results.

SISTEM KOORDINASI ANTARA OTORITAS JASA KEUANGAN (OJK) DENGAN LEMBAGA PENJAMIN SIMPANAN (LPS) DALAM PENANGANAN BANK GAGAL

2017 ◽  
Vol 6 (1) ◽  
pp. 1
Author(s):  
WIWIN WINTARSIH WINDIANTINA
Keyword(s):  
Economic Growth ◽  
Financial Services ◽  
Deposit Insurance ◽  
Banking Sector ◽  
Banking Industry ◽  
Financial Service ◽  
Financial Service Authority ◽  
Insurance Agency ◽  
Financial Transactions ◽  
The Impact

ABSTRACTThe banking industry is a dynamic sector along with economic growth, an increasing of complex financial transactions, and the impact from global trade, therefore the presence of an independent institutions is really needed. The Deposit Insurance Agency (LPS) is an institution that is independent, transparent and accountable in implementing its duties and authorities. As an independent agency, accountability is very important to be applied, so that stakeholders aware of what and how LPS implement the functions and duties as mandated by Law No. 24 of 2004 concerning the Deposit Insurance Agency (LPS). Procedurally, if the Financial Services Authority (OJK) indicate a bank that is experiencing liquidity problems, Financial Services Authority (OJK) immediately inform the Bank of Indonesia (BI) to take steps in accordance with BI's authority. In practise, Financial Service Authority (OJK) coordinate withBank of Indonesia (BI) to make regulatory supervision in banking sector. Coordination in handling between failed banks between the Deposit Insurance Agency (LPS) and Financial Services Authority (OJK) is shown by a confirmation from Financial Services Authority (OJK) to the Deposit Insurance Agency (LPS) about troubled banks that are in the restructuring efforts by Financial Services Authority (OJK), then the Deposit Insurance Agency (LPS) investigate the banks in accordance with its functions, duties and responsibilities. The Deposit Insurance Agency (LPS) as an institution that checks condition of banks surely will review and determine whether the troubled banks will be saved or not saved.

scholarly journals Identity Management Reform and Fraud Prevention in the Nigerian Banking Industry

2021 ◽  
Vol 11 (5) ◽  
Author(s):  
Ikeobi Nneka Rosemary ◽  
Ayeni Akintunde Olawande
Keyword(s):  
Deposit Insurance ◽  
Identity Management ◽  
Banking Industry ◽  
Secondary Data ◽  
Internet Banking ◽  
Annual Reports ◽  
Fraud Prevention ◽  
Management Reform ◽  
Before And After ◽  
Nigerian Banking

This paper assesses the effect ofidentity management reform, namely the Bank verification number (BVN) policy on fraud prevention in the Nigerian banking industry. Using secondary data obtained from annual reports of Nigerian Deposit Insurance Corporation (NDIC) from 2011 to 2018, the study employed descriptive method to analyze trend in fraud variables before and after introduction of the policy and independent t-test to test the hypotheses in the study. Findings revealed that there was an initial decrease in number of staff involved and total amount involved in fraud in the two years following BVN introduction, but which showed increases thereafter.A similar trend was revealed in various fraud types with internet banking fraud showing significant increases in frequency of cases. The results from the t-tests revealed that theBVN policy had no significant impact on fraud prevention within the period under study. It was recommended that the banking public be educated on the different types of fraud and how to protect their personal details from getting into wrong hands. There is also the need to beef up security by improving on protocols required to carry out bank transactions particularly in the area of internet banking. It was also suggested that all bank account numbers be linked to the National Identity Number (NIN) immediately in line with proposals made by the Federal Government on identity management.

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