Can the Indonesian banking industry benefit from a risk-based deposit insurance system?

Muhammad Nizar and Alfan Mansur

MPRA Paper from University Library of Munich, Germany

Abstract: A risk-based premium scheme could be a reliable system to determine a fairer deposit insurance premium. This research aimed to assess Indonesian banks’ risk profile, including per size classification and ownership as well as to counterfactually simulate a risk-based deposit insurance system for the individual banks. This research combined analysis of variance (ANOVA) and non-parametric approach applied to 75 banks (2008q1-2019q3). The results showed that big banks did not necessarily posture better risk management compared to small banks. Also, under the risk-based scheme, banks with better risk management could be rewarded, while less prudent banks could be punished.

Keywords: Deposit; premium; flat-rate; risk-based; banks; insurance (search for similar items in EconPapers)
JEL-codes: C12 C54 G21 G28 G3 G30 (search for similar items in EconPapers)
Date: 2021-05
New Economics Papers: this item is included in nep-ias, nep-isf, nep-rmg and nep-sea
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Published in Macroeconomics and Finance in Emerging Market Economies (2021): pp. 1-20

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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:109083

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