Indonesia Deposit Insurance Corporation

Lily Engbith ()
Additional contact information
Lily Engbith: YPFS, Yale School of Management, https://elischolar.library.yale.edu/journal-of-financial-crises/

Journal of Financial Crises, 2022, vol. 4, issue 2, 399-411

Abstract: To address the risk of capital flight to neighboring countries during the Global Financial Crisis, the Indonesian government raised the limit on insured deposits 20-fold from IDR 100 million to IDR 2 billion per account (about USD 200,000). The President issued two government regulations on October 13, 2008. The first was an emergency decree that authorized the government, in consultation with the Indonesian Parliament, to alter the limit in times of systemic financial distress. The second was a government regulation enacting the actual increase, which has remained in effect since the crisis. All banks operating within Indonesia, including branches of foreign banks conducting business in the country, were required to be members of the IDIC and therefore covered by the guarantee. Covered forms of deposit accounts included current accounts, term deposits, certificates of deposit, savings accounts, and Sharia-based (Islamic) accounts. As a direct result of the insurance increase, total insured deposits doubled to IDR 957.4 trillion between October and December 2008. By year-end 2009, the IDIC had paid out IDR 557.6 billion to eligible depositors at 21 relatively small liquidated banks. Evaluations of the program were mixed: although the intervention was seen as having contributed to the stabilization of the banking system, some commentators suggest that the government should have enacted a blanket guarantee for all deposit accounts, which had been in place between 1998 and 2006.

Keywords: Account guarantees; Global Financial Crisis; Indonesia; Indonesia Deposit Insurance Corporation; Lembaga Penjamin Simpanan (search for similar items in EconPapers)
JEL-codes: G01 G28 (search for similar items in EconPapers)
Date: 2022
References: Add references at CitEc
Citations:

Downloads: (external link)
https://elischolar.library.yale.edu/cgi/viewconten ... -of-financial-crises (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ysm:ypfsfc:v:4:y:2022:i:2:p:399-411

Access Statistics for this article

More articles in Journal of Financial Crises from Yale Program on Financial Stability (YPFS) Contact information at EDIRC.
Bibliographic data for series maintained by ().