Bank Borrowing and Financing of Medium-sized Firms in Indonesia

The improvement of financial intermediation functions is crucial for a robust banking system. When lending, banks have to cope with such problems as information asymmetry and adverse selection. In order to mitigate these problems, banks have to product information and improve their techniques of lending. During the 1998 financial crisis, Indonesia's banking system suffered severe damage and revealed that the country's banking intermediation functions did not work well. This paper examines the financial intermediation functions of banks in Indonesia and analyzes the importance of bank lending to firms. The focus is on medium-sized firms, and "relationship lending", one of the bank lending techniques, is used to examine financial intermediation in Indonesia. The results of logit regressions show that the relationship between a bank and a firm affects the probability of bank lending. The amount of borrowing and collateral are also affected by a firm's relationship with a bank. When viewed from the standpoint of relationship lending to medium-sized firms, Indonesian banks cannot be criticized for any malfunction of financial intermediation.

Transformation of the Financial Sector in Indonesia

Introduction : The source and deployment of finance are central issues in economic development. Since 1966, when the Soeharto Administration was inaugurated, Indonesian economic development has relied on funds in the form of aid from international organizations and foreign countries. After the 1990s, a further abundant inflow of capital sustained a rapid economic development. Foreign funding was the basis of Indonesian economic growth. This paper will describe the mechanism for allocating funds in the Indonesian economy. It will identify the problems this mechanism generated in the Indonesian experience, and it will attempt to explain why there was a collapse of the financial system in the wake of the Asian Currency Crisis of 1997. History of the Indonesian Financial system The year 1966 saw the emergence of commercial banks in Indonesia. It can be said that before 1966 a financial system hardly existed, a fact commonly attributed to economic disruptions like the consecutive runs of fiscal deficit and hyperinflation under the Soekarno Administration. After 1996, with the inauguration of Soeharto, a regulatory system of financial legislation, e.g. central banking law and banking regulation, was introduced and implemented, and the banking sector that is the basis of the current financial system in Indonesia was built up. 　　　The Indonesian financial structure was significantly altered at the first financial reform of 1983. Between 1966 and 1982, the banking sector consisted of Bank Indonesia (the Central Bank) and the state-owned banks. There was also a system for distributing the abundant public revenue derived from the soaring oil price of the 1970s. The public finance distribution function, incorporated in Indonesian financial system, changed after the successive financial reforms of 1983 and 1988, when there was a move away from the monopoly-market style dominated by state-owned banks (which was a system of public finance distribution that operated at the discretion of the government) towards a modern market mechanism. The five phases of development The Indonesian financial system developed in five phases between 1966 and the present time. The first period (1966-72) was its formative period, the second (1973-82) its policy based finance period under soaring oil prices, the third (1983-91) its financial-reform period, the fourth (1992-97) its period of expansion, and the fifth (1998-) its period of financial restructuring. The first section of this paper summarizes the financial policies operative during each of the periods identified above. In the second section changes to the financial sector in response to policies are examined, and an analysis of these changes shows that an important development of the financial sector occurred during the financial reform period. In the third section the focus of analysis shifts from the general financial sector to particular commercial banks’ performances. In the third section changes in commercial banks’ lending and fund-raising behaviour after the 1990s are analysed by comparing several banking groups in terms of their ownership and foundation time. The last section summarizes the foregoing analyses and examines the problems that remain in the Indonesian financial sector, which is still undergoing restructuring.

Related Lending and Bank Performance: Evidence from Indonesia

After the Asian financial crisis of 1997, it was confirmed that banks lend to their related parties in many countries. The question examined in this article is whether related lending functions to alleviate the problems of asymmetric information or transfers profits from depositors and minority shareholders to related parties. The effects of related lending on the profitability and risk of banks in Indonesia are examined using panel data from 1994 to 2007 comprising a total of 74 Indonesian banks. The effects on return on asset (ROA) varied at different periods. Before and right after the crisis, a higher credit allocation to related parties increased ROA. In middle of the crisis, it turned to negative; and this has also been the case in the most recent period as the Indonesian economy has normalized. Effects of related lending on bank risk measured by the Z-score and non-performing loan is not clear. After undergoing bank restructuring, related lending has decreased and the profit structure of banks has changed.

Market discipline by depositors : impact of deposit insurance on the Indonesian banking sector

This paper investigates market discipline by depositors in the Indonesian banking sector. Does depositor discipline fulfill its role in Indonesia? Does deposit insurance affect depositor behavior thereby imposing discipline on banks? These questions are empirically examined using panel data on Indonesian commercial banks from 1998 to 2009. In Indonesia deposit insurance was introduced in 2005. Depositor discipline is examined by two measures: change in the amount of deposits and interest rate. The empirical results show that depositors pay attention to bank soundness and riskiness and select banks based on the bank's condition with particular attention paid to equity ratio. It is found that depositors impose discipline on banks, but it varies according to regulatory and economic circumstances.

Impact of foreign capital entry in the Indonesian banking sector

After the Asian financial crisis of 1997/98, the Indonesian banking sector experienced significant changes. Ownership structure of banking sector is substantially-changed. Currently, ownership of major commercial banks is dominated by foreign capital through acquisition. This paper examines whether foreign ownership changes a bank’s lending behavior and performance. Foreign banks tend to lend mainly to large firms; this paper examines whether the credit to small and medium-sized enterprises (SMEs) is affected by foreign capital entry into the Indonesian banking sector. Empirical results show that banks owned by foreign capital tend to decrease SME credit.

Excess capital and bank behavior : evidence from Indonesia

The Indonesian banking sector has been restructured since Asian financial crisis and restored to soundness. The capital adequacy ratio (CAR) returned to a sound level; however, the average excess capital has become too high, while credit disbursement has remained low. This paper investigates the determinants of excess capital among Indonesian banks and its effects on credit growth during the 2000s. The results indicate that the determinants of excess capital vary widely depending on bank type. Return on equity (ROE) affects excess capital negatively among domestic banks, and the effect of non-performing loans is mixed, differing for various bank types. Excess capital affects credit growth positively, except among foreign banks.

Measurements of different acoustic conditions in small rectangular rooms

Impulse response measurements are carried out in laboratory facilities at Ecophon, Sweden, simulating a typical classroom with varying suspended ceilings and furniture arrangements. The aim of these measurements is to build a reliable database of acoustical parameters in order to have enough data to validate the new acoustical simulation tool which is under development at Danmarks Tekniske Universitet, Denmark. The different classroom configurations are also simulated using ODEON Room Acoustics software and are compared with the measurements. The resulting information is essential for the development of the acoustical simulation tool because it will enable the elimination of prediction errors, especially those below the Schroeder frequency. The surface impedance of the materials used during the experiments is measured in a Kundt’s tube at DTU, in order to characterize them as accurately as possible at the time of incorporation into the model. A brief study about porous materials frequently used in classrooms is presented. Wide diferences are found between methods of measuring absorption coefficients and local or extended assumptions. RESUMEN. Mediciones de Respuesta al Impulso son llevadas a cabo en las instalaciones con que cuenta la empresa Ecophon en su sede central de Hyllinge, Suecia. En una de sus salas, se recrean diferentes configuraciones típicas de aula, variando la altura y composición de los techos, colocando paneles absorbentes de pared e incluyendo diferentes elementos mobiliario como pupitres y sillas. Tres diferentes materiales absorbentes porosos de 15, 20 y 50 mm de espesor, son utilizados como techos suspendidos así como uno de 40 mm es utilizado en forma de paneles. Todas las medidas son realizadas de acuerdo al estándar ISO 3382, utilizando 12 combinaciones de fuente sonora y micrófono para cada configuración, así como respetando las distancias entre ellos establecidas en la norma. El objetivo de toda esta serie de medidas es crear una base de datos de parámetros acústicos tales como tiempo de reverberación, índice de claridad o índice de inteligibilidad medidos bajo diferentes configuraciones con el objeto de que éstos sirvan de referencia para la validación de una nueva herramienta de simulación acústica llamada PARISM que está siendo desarrollada en este momento en la Danmarks Tekniske Universitet de Copenhague. Esta herramienta tendrá en cuenta la fase, tanto en propagación como en reflexión, así como el comportamiento angulodependiente de los materiales y la difusión producida por las superficies. Las diferentes configuraciones de aula recreadas en Hyllinge, son simuladas también utilizando el software de simulación acústica ODEON con el fin de establecer comparaciones entre medidas y simulaciones para discutir la validez de estas ultimas. La información resultante es esencial para el desarrollo de la nueva herramienta de simulación, especialmente los resultados por debajo de la frecuencia de corte de Schroeder, donde ODEON no produce predicciones precisas debido a que no tiene en cuenta la fase ni en propagación ni en reflexión. La impedancia de superficie de los materiales utilizados en los experimentos, todos ellos fabricados por la propia empresa Ecophon, es medida utilizando un tubo de Kundt. De este modo, los coeficientes de absorción de incidencia aleatoria son calculados e incorporados a las simulaciones. Además, estos coeficientes también son estimados mediante el modelo empírico de Miki, con el fin de ser comparados con los obtenidos mediante otros métodos. Un breve estudio comparativo entre coeficientes de absorción obtenidos por diversos métodos y el efecto producido por los materiales absorbentes sobre los tiempos de reverberación es realizado. Grandes diferencias son encontradas, especialmente entre los métodos de tubo de impedancia y cámara reverberante. La elección de reacción local o extendida a la hora de estimar los coeficientes también produce grandes diferencias entre los resultados. Pese a que la opción de absorción angular es activada en todas las simulaciones realizadas con ODEON para todos los materiales, los resultados son mucho más imprecisos de lo esperado a la hora de compararlos con los valores extraidos de las medidas de Respuesta al Impulso. En salas como las recreadas, donde una superficie es mucho más absorbente que las demás, las ondas sonoras tienden a incidir en la superficie altamente absorbente desde ángulos de incidencia muy pequeños. En este rango de ángulos de incidencia, las absorciones que presentan los materiales absorbentes porosos estudiados son muy pequeñas, pese a que sus valores de coeficientes de absorción de incidencia aleatoria son altos. Dado que como descriptor de las superficies en ODEON se utiliza el coeficiente de absorción de incidencia aleatoria, los tiempos de reverberación son siempre subestimados en las simulaciones, incluso con la opción de absorción angular activada. Esto es debido a que el algoritmo que ejecuta esta opción, solo tiene en cuenta el tamaño y posición de las superficies, mientras que el comportamiento angulodependiente es diferente para cada material. Es importante destacar, que cuando la opción es activada, los tiempos simulados se asemejan más a los medidos, por lo tanto esta característica sí produce ciertas mejoras pese a no modelar la angulodependencia perfectamente. Por otra parte, ODEON tampoco tiene en cuenta el fenómeno de difracción, ni acepta longitudes de superficie menores de una longitud de onda a frecuencias medias (30 cm) por lo que en las configuraciones que incluyen absorbentes de pared, los cuales presentan un grosor de 4 cm que no puede ser modelado, los tiempos de reverberación son siempre sobreestimados. Para evitar esta sobreestimación, diferentes métodos de correción son analizados. Todas estas deficiencias encontradas en el software ODEON, resaltan la necesidad de desarrollar cuanto antes la herramienta de simulación acústica PARISM, la cual será capaz de predecir el comportamiento del campo sonoro de manera precisa en este tipo de salas, sin incrementar excesivamente el tiempo de cálculo. En cuanto a los parámetros extraidos de las mediciones de Respuesta al Impulso, bajo ninguna de las configuraciones recreadas los tiempos de reverberación cumplen con las condiciones establecidas por la regulación danesa en materia de edificación. Es importante destacar que los experimentos son llevados a cabo en un edificio construido para uso industrial, en el que, pese a contar con un buen aislamiento acústico, los niveles de ruido pueden ser superiores a los existentes dentro del edificio donde finalmente se ubique el aula. Además, aunque algunos elementos de mobiliario como pupitres y sillas son incluidos, en una configuración real de aula normalmente aparecerían algunos otros como taquillas, que no solo presentarían una mayor absorción, sino que también dispersarían las ondas incidentes produciendo un mejor funcionamiento del techo absorbente. Esto es debido a que las ondas incidirían en el techo desde una mayor variedad de ángulos, y no solo desde ángulos cercanos a la dirección paralela al techo, para los cuales los materiales presentan absorciones muy bajas o casi nulas. En relación a los otros parámetros como índice de claridad o índice de inteligibilidad extraidos de las medidas, no se han podido extraer conclusiones válidas dada la falta de regulación existente. Sin embargo, el efecto que produce sobre ellos la inclusión de techos, paneles de pared y mobiliario sí es analizada, concluyendo que, como era de esperar, los mejores resultados son obtenidos cuando todos los elementos están presentes en la sala en el mismo momento.

A critical role of Lyn and Fyn for B cell responses to CD38 ligation and interleukin 5

CD38 ligation on mouse B cells by CS/2, an anti-mouse CD38 mAb, induced proliferation, interleukin 5 (IL-5) receptor α chain expression, and tyrosine phosphorylation of Bruton tyrosine kinase (Btk) from wild-type, but not from X chromosome-linked, immunodeficient mice. B cells from fyn-deficient (Fyn−/−) and lyn-deficient (Lyn−/−) mice showed an impaired response to mAb CS/2 for proliferation and IL-5 receptor α chain expression, and B cells from fyn/lyn double-deficient (Fyn/Lyn−/−) mice did not respond at all to mAb CS/2. The Btk activation by CD38 ligation was observed in B cells from Fyn−/− mice, and it was severely impaired in B cells from Lyn−/− and Fyn/Lyn−/− mice. CD38 expression on B cells from three mutant strains was comparable to that on control B cells. We infer from these results that both Fyn and Lyn are required and that their signals are synergistic for B cell triggering after CD38 ligation. Lyn is upstream of Btk activation in the CD38 signaling. Stimulation of B cells with IL-5 together with CD38 ligation induces not only IgM but also IgG1 secretion. Analysis of the synergistic effects of IL-5 and CD38 ligation on IgG1 secretion revealed the impaired IgG1 secretion of B cells from Lyn−/− and Fyn/Lyn−/− mice. These data imply that Lyn is involved in B cell triggering by CD38 ligation plus IL-5 for isotype switching.