The research and bank model developed in this paper for the case of Indonesia is motivated by the following: 1. A recent change in banking regulations in Indonesia, like the statutory reserve requirement and full implementation of Basel II in 2011, coupled with a lack of literature to document...

The causality between energy consumption and real income in developed countries has been a very vital research topic in recent years. Raising concerns about climate change and global warming increase the pressure on policy makers to take action against energy depletion. Unfortunately these...

Indonesia’s economy is getting more integrated with the global economy. Potential impact of global economy shocks to domestic economy propagated through trade channel and financial channel are increasingly pronounced. Risk of sudden reversal following large capital inflows poses a serious...

The standard vector error correction (VEC) model assumes the iid normal distribution of disturbance term in the model. This paper extends this assumption to include GARCH process. We call this model as VEC-GARCH model. However as the number of parameters in a VEC-GARCH model is large, the...

A well-functioning financial system is necessary for an effective monetary policy transmission. Simultaneously, monetary policy can also influence financial system stability through its effect on financial condition and behavior of the financial market. Changes in policy rate will have an effect...

A run on a bank occurs when a large number of depositors, fearing that their bank will be unable to repay their deposits in full and on time, simultaneously try to withdraw their funds immediately. A run on a particular bank can lead to a banking crisis if it spreads to other banks (contagious...

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Baumol (1990) famously argues that entrepreneurs are individuals who exploit opportunities, be they in the productive (enterprises) or the unproductive sector (lobbying, rent-seeking, corruption…), and that the prevalence of one or the other type of entrepreneurship depends on the quality of...

A large portion of the Indonesian population is entering the middle-class as its economy is growing rapidly. Nielsen, a leading media research said that currently, middle class in Indonesia is the third-largest in the world. There are about 74 million middle classes in Indonesia, and this number...