The Boom, Bust and Restructuring of Indonesian Banks

Mari Pangestu and Manggi Habir

No 2002/066, IMF Working Papers from International Monetary Fund

Abstract: This paper studies why currency and monetary shock hit Indonesia's economy and banking sector so severely and the measures that were taken to deal with the banking crisis, the lessons learned, and challenges faced in restructuring and strengthening the banking system. The vulnerable state of the banking sector, in combination with exchange rate and interest rate shocks, led to a systemic banking crisis. The priorities for bank restructuring are to complete the separation of nonviable from viable banks, recoup losses, implement new rules and regulations, and develop an incentive-based system for the consolidation of banks.

Keywords: WP; central bank; bank Indonesia; liquidity support; bank restructuring; bank Danamon; foreign exchange; Indonesia; Asian financial crisis; banking reforms; commercial paper; bank Central Asia; bank closure; c bank; community bank; bank restructuring program; recapitalized bank; thirty-eight bank; development bank; bank Putera; Commercial banks; Loans; Foreign banks; Bank resolution; Nonperforming loans; East Asia; Central Asia (search for similar items in EconPapers)
Pages: 35
Date: 2002-04-01
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Citations: View citations in EconPapers (26)

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