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Mengukur Perkembangan Sektor Keuangan di Indonesia dan Faktor – Faktor yang Mempengaruhi
[Assessing the Measurement and Determinants of Financial Sector Development in Indonesia]

Author

Listed:
  • Mansur, Alfan
  • Nizar, Muhammad Afdi

Abstract

In a number of occasions during the bad times where financial markets are under pressure, Indonesia often suffers the most compared to neighbors or peer countries. It indicates that there is something fundamental as the driving factors and the depth of the Indonesian financial sector may be the major factor. This research aims to investigate how deep and develop the Indonesian financial sector using multiple indicators and metrics. This research also investigates the causal relationship between financial sector development and the economic growth whether the Indonesian financial sector is supply-leading or demand-following. Moreover, this research attempts to identify the determinants of the financial sector development in Indonesia. The results show that the development of the Indonesian financial sector has been focused on the access aspect, while the development of its depth as well as efficiency is still limited. The depth level by the end of 2018 was even still lower than the level in the mid-1990s. The research's results also show that the financial sector development in Indonesia is demand-following or it develops as the economy grows. Lastly, the results show that the financial sector development in Indonesia is affected by multi-aspect factors ranging from macroeconomic factors and institutions to the openness levels either trade openness or financial openness. On those many structural aspects, Indonesia is inferior compared with many countries, so it is not a coincidence that the Indonesian financial sector is less developed compared to the many countries.

Suggested Citation

  • Mansur, Alfan & Nizar, Muhammad Afdi, 2019. "Mengukur Perkembangan Sektor Keuangan di Indonesia dan Faktor – Faktor yang Mempengaruhi [Assessing the Measurement and Determinants of Financial Sector Development in Indonesia]," MPRA Paper 96265, University Library of Munich, Germany, revised 30 Sep 2019.
    • Handle: RePEc:pra:mprapa:96265
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    References listed on IDEAS

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    More about this item

    Keywords

    financial sector; development; market; depth; economy;
    All these keywords.

    JEL classification:

    • C12 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Hypothesis Testing: General
    • C43 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Index Numbers and Aggregation
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation

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