INTEREST RATE POLICY AND ITS IMPLICATION ON THE BANKING RESTRUCTURING PROGRAMS IN INDONESIA DURING THE 1997-FINANCIAL CRISIS: AN EMPIRICAL INVESTIGATION

Reza Siregar

No 154, EIJS Working Paper Series from Stockholm School of Economics, The European Institute of Japanese Studies

Abstract: Despite a number of changes in the leaderships of the Indonesian Bank Restructuring Agency (IBRA) and in the policy approaches adopted by the country to restructure the banking sector, the progress has been less than impressive. This study shows that that the selection of policy measures adopted by the monetary authorities during the post-1997 financial crisis, has adversely affected the performance of the restructured banks. In particular, the high domestic interest rate policy adopted to stabilize the local currency and to keep a tight growth of base money has not been an effective one. Instead, this policy has arguably raised the cost of bank restructuring in the country.

Keywords: Financial Crisis; Bank Restructuring; Interest Rate (search for similar items in EconPapers)
JEL-codes: E51 E52 E58 F31 (search for similar items in EconPapers)
Pages: 28 pages
Date: 2002-09-01
New Economics Papers: this item is included in nep-ifn
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:hhs:eijswp:0154

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