Macroeconomic effect and risk-taking behavior in a dual banking system

Fakhrunnas, Faaza; Dari, Wulan; Mifrahi, Mustika Noor

Abstract

This study aims to analyze the relationship between macroeconomic factors and risk-taking behavior in a dual banking system. Adopting a panel cointegration approach, this research posits macroeconomic factors as exogenous variables and risk-taking behavior as endogenous variables. With having 468 quarterly- observations consisting of 18 banks in Indonesia during 2010-Q4 to 2017-Q1, it finds that the risk-taking behavior of the banks has a long-term relationship with macroeconomic factors. Moreover, conventional bank has long-term relationship to macroeconomic nonetheless it results inversely to Islamic bank. In terms of bank- specified characteristics, bank size and equity to asset ratio are substantial factors for the banks’ risk mitigation.

Citation

Fakhrunnas, F., Dari, W., & Mifrahi, M. N. (2018). Macroeconomic effect and risk-taking behavior in a dual banking system. Economic Journal of Emerging Markets, 10(2), 165-176. https://doi.org/10.20885/ejem.vol10.iss2.art5

• Journal Article Type: Article
• Acceptance Date: Jul 2, 2018
• Online Publication Date: Oct 1, 2018
• Publication Date: Oct 1, 2018
• Deposit Date: Oct 31, 2018
• Publicly Available Date: Oct 31, 2018
• Journal: Economic Journal of Emerging Markets.
• Print ISSN: 2086-3128
• Electronic ISSN: 2502-180X
• Publisher: Center for Economic Studies, Department of Economics, Universitas Islam Indonesia
• Peer Reviewed: Peer Reviewed
• Volume: 10
• Issue: 2
• Pages: 165-176
• DOI: https://doi.org/10.20885/ejem.vol10.iss2.art5
• Public URL: https://durham-repository.worktribe.com/output/1315005