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Penentuan Bobot Resiko Kredit Untuk Rumah Tinggal: Studi Kasus Di Indonesia

Author

Listed:
  • Imansyah

    (Bank Indonesia)

  • Mirza Yuniar Isnaeni Mara

    (Bank Indonesia)

Abstract

This paper analyzes the appropriateness of the basic risk weight for the fully secured residential mortgage, recommended in Basel II, to be implemented on Indonesian economy. As the supervisory authorities can customize the 35% of recommended risk weight based on the national arrangements, we analyze the practical ground of the residential mortgage in Indonesia focusing on the probability and the loss given default for this credit type. The result propose a lower risk weight for a fully secured residential mortgage risk weight. For a different types of residential mortgage, this paper suggest the use of Loan to Value (LTV) ratio to determine the risk weight. Rather than using a uniform 50% risk weight as required by the current regulation, our result recommend to give a different weight for a different LTV class; 75% weight for LTV greater than 90%, 50% for LTV between 80% to 90%, 45% for LTV between 70% to 80%, and 40% for a LTV less than 70%. However, the adoption of the proposed residential mortgage risk weight is subject to 2 strict prudential criterias; (i) the loan is used as the residence of the borrower; (ii) the loan is secured by the first lien or first legal charge on the residential property.

Suggested Citation

  • Imansyah & Mirza Yuniar Isnaeni Mara, 2007. "Penentuan Bobot Resiko Kredit Untuk Rumah Tinggal: Studi Kasus Di Indonesia," Bulletin of Monetary Economics and Banking, Bank Indonesia, vol. 10(1), pages 23-48, July.
    • Handle: RePEc:idn:journl:v:10:y:2007:i:1b:p:23-48
    DOI: https://doi.org/10.21098/bemp.v10i1.218
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    More about this item

    Keywords

    weight risk; bank; mortgage; default; Basel II; Indonesia;
    All these keywords.

    JEL classification:

    • E51 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Money Supply; Credit; Money Multipliers
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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