Government intervention, bank ownership and risk-taking during the Indonesian financial crisis

Pacific Basin Finance Journal

Volumn 30, Issue , 2014, Pages 114-131

  Agusman, Agusman ^a   Cullen, Grant S ^b   Gasbarro, Dominic ^b   Monroe, Gary S ^c   Zumwalt, J Kenton ^d  

^a BANK INDONESIA   (Indonesia)

^b MURDOCH UNIVERSITY   (Australia)

^c UNIVERSITY OF NEW SOUTH WALES   (Australia)

^d Veterinary Dentistry and Oral Surgery   (United States)

Author keywords

Bank risk taking; Blanket guarantee; Capital regulation; G21; G28; G30; G32; Government intervention; Ownership structure

Indexed keywords

EID: 84905252199     PISSN: 0927538X     EISSN: None     Source Type: Journal    
DOI: 10.1016/j.pacfin.2014.07.003     Document Type: Article

References (58)

1. Agusman An Empirical Examination of Bank Risk Taking - Asian Evidence 2006, PhD Thesis, The Australian National University, Australia.
2. Agusman A., Gasbarro D., Monroe G.S., Zumwalt J.K. Accounting capital market measures of risk: evidence from Asian banks during 1998-2003. J. Bank. Financ. 2008, 32:480-488.
3. Alston L.J., Grove W.A., Wheelock D.C. Why do banks fail? Evidence from the 1920s. Explor. Econ. Hist. 1994, 31:409-431.
4. Anderson R.C., Fraser D.R. Corporate control, bank risk taking, and the health of the banking industry. J. Bank. Financ. 2000, 24:1383-1398.
5. Anginer D., de la Torre A., Ize A. Risk-bearing by the state: when is it good public policy?. J. Financ. Stab. 2014, 10:76-86.
6. Anginer D., Demirguc-Kunt A., Zhu M. How does deposit insurance affect bank risk? Evidence from the recent crisis. J. Bank. Financ. 2014, (in press).
7. Arellano M. Computing robust standard errors for within-groups estimators. Oxf. Bull. Econ. Stat. 1987, 49:431-434.
8. Arellano M. Panel Data Econometrics 2003, Oxford University Press, New York.
9. Baltagi B.H. Econometric Analysis of Panel Data 2001, John Wiley & Sons Ltd., Chichester. Second Edition.
10. Barry T.A., Lepetit L., Tarazi A. Ownership structure and risk in publicly held and privately owned banks. J. Bank. Financ. 2011, 35:1327-1340.
11. Batunanggar S. Indonesia's banking crisis resolution: lessons and the way forward. Working Paper, Bank Indonesia 2002.
12. Bertrand M., Duflo E., Mullainathan S. How much should we trust differences-in-differences estimates?. Q. J. Econ. 2004, 119:249-275.
13. Chen C.R., Thomas L., Steiner T.L., Whyte A.M. Risk-taking behavior and management ownership in depository institutions. J. Financ. Res. 1998, 21:1-16.
14. Chowdhry B., Goyal A. Understanding the financial crisis in Asia. Pac. Basin Financ. J. 2000, 8:135-152.
15. Claessens S., Djankov S., Lang L.H.P. The separation of ownership and control in East Asian corporations. J. Financ. Econ. 2000, 58:81-112.
16. Crosby M. Exchange rate volatility and macroeconomic performance in Hong Kong. Rev. Dev. Econ. 2004, 8:606-623.
17. Demirgüç-Kunt A., Detragiache E. Does deposit insurance increase banking system stability? An empirical investigation. J. Monet. Econ. 2002, 49:1337-1371.
18. DeYoung R., Spong K., Sullivan R.J. Who's minding the store? Motivating and monitoring hired managers at small, closely held commercial banks. J. Bank. Financ. 2001, 25:1209-1243.
19. Diamond D.W., Dybvig P.H. Bank runs, deposit insurance, and liquidity. J. Polit. Econ. 1983, 91:401-419.
20. Elyasiani E., Mansur I. The association between market and exchange risks and accounting variables: a GARCH model of the Japanese banking institutions. Rev. Quant. Finan. Acc. 2005, 25:183-206.
21. Enoch C. Interventions in banks during banking crises: the experience of Indonesia. IMF Policy Discussion Paper, PDP/00/2 2000.
22. Fane G., McLeod R.H. Banking collapse and restructuring in Indonesia 1997-2001. Cato J. 2002, 22:277-295.
23. Forssbæck J. Ownership structure, market discipline, and banks' risk-taking incentives under deposit insurance. J. Bank. Financ. 2011, 35:2666-2678.
24. Furlong F.T., Keeley M.C. Capital regulation and bank risk-taking: a note. J. Bank. Financ. 1989, 13:883-891.
25. Galloway T.M., Lee W.B., Roden D.M. Banks' changing incentives and opportunities for risk taking. J. Bank. Financ. 1997, 21:509-527.
26. Gennotte G., Pyle D. Capital controls and bank risk. J. Bank. Financ. 1991, 15:805-824.
27. Grossman R.S. Deposit insurance, regulation, and moral hazard in the thrift industry: evidence from the 1930s. Am. Econ. Rev. 1992, 82:800-821.
28. Gueyie J.-P., Lai V.S. Bank moral hazard and the introduction of official deposit insurance in Canada. Int. Rev. Econ. Financ. 2003, 12:247-273.
29. Hooks L.M., Robinson K.J. Deposit insurance and moral hazard: evidence from Texas banking in the 1920s. J. Econ. Hist. 2002, 62:833-853.
30. Hsiao C. Analysis of Panel Data 2003, Cambridge University Press, Cambridge, New York. Second Edition.
31. Jacques K., Nigro P. Risk-based capital, portfolio risk, and bank capital: a simultaneous equations approach. J. Econ. Bus. 1997, 49:533-547.
32. Jahankhani A., Lynge M.J. Commercial bank financial policies and their impact on market-determined measures of risk. J. Bank Res. 1980, 11:169-178.
33. John K., John T.A., Senbet L.W. Risk-shifting incentives of depository institutions: a new perspective on federal deposit insurance reform. J. Bank. Financ. 1991, 15:895-915.
34. Kahane Y. Capital adequacy and the regulation of financial intermediaries. J. Bank. Financ. 1977, 1:207-218.
35. Kareken J.H. Deposit insurance reform or deregulation is the cart, not the horse. Q. Rev. Fed. Reserv. Bank Minneap. 1983, 7:1-9.
36. Karels G.V., McClatchey C.A. Deposit insurance and risk-taking behavior in the credit union industry. J. Bank. Financ. 1999, 23:105-134.
37. Keeley M.C., Furlong F.T. A reexamination of mean-variance analysis of bank capital regulation. J. Bank. Financ. 1990, 14:69-84.
38. Kho B.-C., Stulz R.M. Banks, the IMF, and the Asian crisis. Pac. Basin Financ. J. 2000, 8:177-216.
39. Kim K.A., Rhee S.G. A note on shareholder oversight and the regulatory environment: the Japanese banking experience. Working Paper Series 2000-2 2000, Center for Economic Institutions (CEI), Hitotsubashi University, Japan.
40. Kim D., Santomero A.M. Risk in banking and capital regulation. J. Financ. 1988, 43:1219-1233.
41. Kim K.A., Lee S.H., Rhee S.G. Shareholder oversight under changing regulatory environments: the Japanese banking experience. Working Paper 2002.
42. Koehn M., Santomero A.M. Regulation of bank capital and portfolio risk. J. Financ. 1980, 35:1235-1244.
43. Kwon C.S., Shin T.S., Bacon F.W. The effect of macroeconomic variables on stock market returns in developing markets. Multinatl. Bus. Rev. 1997, 5:63-70.
44. Laeven L. Bank risk and deposit insurance. World Bank Econ. Rev. 2002, 16:109-137.
45. Mansur I., Zangeneh H., Zitz M.S. The association between banks' performance ratios and market-determined measures of risk. Appl. Econ. 1993, 25:1503-1510.
46. McAnally M.L. Banks, risk and FAS 105 disclosures. J. Account. Audit. Financ. 1996, 11:453-490.
47. Merton R.C. An analytic derivation of the cost of deposit insurance and loan guarantees. J. Bank. Financ. 1977, 1:3-11.
48. Miller M.H. The current Southeast Asia financial crisis. Pac. Basin Financ. J. 1998, 6:225-233.
49. Önder Z., Özyildirim S. "Too-big-to-fail" or full deposit insurance: evidence from Turkey. Working Paper 2003.
50. Pangestu M., Habir M. The boom, bust and restructuring of Indonesian banks. IMF Working Paper, WP/02/66 2002.
51. Sato Y. Bank restructuring and financial institution reform in Indonesia. Dev. Econ. 2005, 43:99-120.
52. Saunders A., Strock E., Travlos N.G. Ownership structure, deregulation, and bank risk taking. J. Financ. 1990, 45:643-654.
53. Shehzad C.T., de Haan J., Scholtens B. The impact of bank ownership concentration on impaired loans and capital adequacy. J. Bank. Financ. 2010, 34:399-408.
54. Shiers A.F. Deposit insurance and banking system risk: some empirical evidence. Q. Rev. Econ. Finance 1994, 34:347-361.
55. Simpson W.G., Gleason A.E. Board structure, ownership, and financial distress in banking firms. Int. Rev. Econ. Financ. 1999, 8:281-292.
56. Wheelock D. Deposit insurance and bank failures: new evidence from the 1920s. Econ. Inq. 1992, 30:530-543.
57. Wheelock D., Kumbhakar S.C. "The slack banker dances": deposit insurance and risk-taking in the banking collapse of the 1920s. Explor. Econ. Hist. 1994, 31:357-375.
58. White L.J. The reform of federal deposit insurance. J. Econ. Perspect. 1989, 3:11-29.