Mengukur Perkembangan Sektor Keuangan di Indonesia dan Faktor – Faktor yang Mempengaruhi

Assessing the Measurement and Determinants of Financial Sector Development in Indonesia

Alfan Mansur and Muhammad Nizar

MPRA Paper from University Library of Munich, Germany

Abstract: In a number of occasions during the bad times where financial markets are under pressure, Indonesia often suffers the most compared to neighbors or peer countries. It indicates that there is something fundamental as the driving factors and the depth of the Indonesian financial sector may be the major factor. This research aims to investigate how deep and develop the Indonesian financial sector using multiple indicators and metrics. This research also investigates the causal relationship between financial sector development and the economic growth whether the Indonesian financial sector is supply-leading or demand-following. Moreover, this research attempts to identify the determinants of the financial sector development in Indonesia. The results show that the development of the Indonesian financial sector has been focused on the access aspect, while the development of its depth as well as efficiency is still limited. The depth level by the end of 2018 was even still lower than the level in the mid-1990s. The research's results also show that the financial sector development in Indonesia is demand-following or it develops as the economy grows. Lastly, the results show that the financial sector development in Indonesia is affected by multi-aspect factors ranging from macroeconomic factors and institutions to the openness levels either trade openness or financial openness. On those many structural aspects, Indonesia is inferior compared with many countries, so it is not a coincidence that the Indonesian financial sector is less developed compared to the many countries.

Keywords: financial sector; development; market; depth; economy (search for similar items in EconPapers)
JEL-codes: C12 C43 E44 G10 G18 G21 G28 (search for similar items in EconPapers)
Date: 2019-09-24, Revised 2019-09-30
New Economics Papers: this item is included in nep-fdg, nep-mac and nep-sea
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