EIJS Working Papers Series
Reza Y. Siregar
INTEREST RATE POLICY AND ITS IMPLICATION ON THE BANKING RESTRUCTURING PROGRAMS IN INDONESIA DURING THE 1997-FINANCIAL CRISIS: AN EMPIRICAL INVESTIGATION.
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; (follow links to similar papers)
JEL-Codes: E51; E52; E58; F31; (follow links to similar papers)
28 pages, September 1, 2002
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