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THE BANK INTERMEDIARY FUNCTION AND UNDISBURSED LOANS PHENOMENON: CAUSES AND POLICY IMPLICATIONS

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The escalation in undisbuned loan in the aftermath of economic crisis, both in nominal terms as well as in proportion to loan commitment, has captured the widespread attention of bankers, businessmen, economists, and central bankers. Many come to believe that this phenomenon might have undermined the performance of bank intermediary function at the time when banking sector still assumed dominant role in financing business activity in Indonesia. Therefore, it might hinder the process of Indonesian economic recovery.

It has been a subject of considerable debate whether the supply or demand side that is more responsible for the occurrence of this phenomenon. The banking sector (supply side) stresses that such phenomenon is more of the result of weak demand. Meanwhile the business sector (demand sidei puts the blame on banks hesitation to lower lending rate materially and to relax the perceived complicated requirements on loan disbursement. Going forward, should this controversy continue without a comprehensive solution, in the end both supply side and demand side are bound to suffer. Banks stand to lose because they fail to optimize their porto folio, likewise business sector will incur losses because they cannot get sufficient financing for their business activities. For the central bank, the large stock of undisbursed loan will hamper the effectiveness of monetary policy transmission mechanism. In this light, I commend this research that sought to explain empirically factors behind the phenomenon and provides some policy recommendations.

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Availability

10000277

332.1 BAN b

RLC MM (Rak Buku Umum)

Available

Detail Information

Series Title

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Statement of Responsibility

Doddy Zulverdi

Call Number

332.1 BAN b

Publisher

Jakarta : Bank Indonesia., 2004

Collation

xii, 72 p. : ill ; 25cm.

Language

English

ISBN/ISSN

979-96680-1-8

Classification

332.1

Content Type

-

Edition

-

Subject(s)

Buku Umum
Banking
Bank Loans

Specific Detail Info

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