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Environmental degradation occurs during the initial phase of development. However, after a turning point, the benefits of economic growth supported by the accelerated development of information and communication technology (ICT) can be used for environmental conservation. This research examines the relationship between financial inclusion, ICT, and environmental quality, including the development of ICT in influencing the relationship between financial inclusion and environmental quality. To obtain the research objectives, we used secondary data for the period 2010 to 2021 from 34 provinces in Indonesia using the panel data regression method. This finding is robust for different measures of the financial inclusion index constructed by a modified estimation model. The insights to financial inclusion and emission can be a reference for regulations that financial inclusion and ICT can be used as mitigation measures for environmental quality. Therefore, policymakers should consider the synergistic effect of financial inclusion and ICT in designing development and climate change policies.

Digital-based financial innovation has grown rapidly in recent times along with internet and smartphone penetration. The emergence of fintech and the existence of digital-based innovations carried out by incumbents in the financial services sector, in this case banking, are expected to increase financial inclusion. Furthermore, financial inclusion will encourage the growth of the real sector through increasing new entrepreneurs and also increasing the scale of existing micro and small businesses so that it will ultimately drive economic output growth. However, to achieve this goal, joint efforts are needed to increase the digital financial literacy of the community, especially the younger generation so that digital financial presence can be used for productive activities. This article discusses community service programs within the framework of developing digital financial literacy to encourage the growth of new entrepreneurs and increase the scale of existing micro and small businesses, especially by utilizing technology..

The purpose of this study was to determine the relationship between financial distress, value of firm and investment decision in the world's largest mining companies. Investment decision in a company is very important in developing the company, it can be by doing business expansion or other things. This research uses quantitative methods. The independent variables in this study are financial distress, firm value and trilemma index. the financial distress coefficient is negative -0.04 significant with a p-value of 0.021 for investment decisions. Financial distress has a negative influence on investment decisions in large mining companies around the world in 2010-2019, which means that in the world's large mining companies, companies that have a financial downturn in their companies tend to make investment decisions with the aim of restoring the company's financial condition. The point is, financial distress here can also occur not because after the company makes an investment decision, the company will experience a financial downturn, this can happen one of them because by making an investment decision it can make the company's finances seem to be reduced but financial conditions can be reduced. by the company in making investments.

This research's main objective is to select profitable investment strategies with the presence of sentiment investors in emerging markets, with behavior bias-based portfolio methods. The sample of 114 companies traded daily on IDX was conducted over three years with weekly data. This study uses pairwise comparison and OLS. The research results show that contrarian strategies are more profitable than momentum. Investors benefit when mild conditions are optimistic and more significant when the conditions are pessimistic. This research proves that investor sentiment in the market can distort investor investment decisions, even using the behavior-bias method. Therefore, forming a portfolio will be more appropriate based on biased behavior because it facilitates investment decision-making.How to Cite:Koesoemasari, D.S.P., Haryono, T., Trinugroho, I., Setiawan, D. (2022). Investment Strategy Based on Bias and Investor Sentiment in Ememerging Market. Etikonomi, 21(1), 1-10. https://doi.org/10.15408/etk.v21i1.22290.

This paper investigates the relationship between fund reallocation on economic growth and poverty by using 1860 rural banks. Our quarterly data allow us to merge bank-level data and province level-data from 2010-2016. We find that loan-to-deposit ratio as our proxy of intermediation function could boost economic development. Our non-linear regression shows that too much finance reduces regional GDP growth but, in the long term, could help to reduce poverty. Our results provide some important policy implications that rural banks could contribute to economic development in a good way but should be highly supervised in terms of risk and competition.

This research examines how the board of commissioners' structure and ownership retention affect IPO underpricing in Indonesia. In this study, we have examined the following three aspects: the number of board of commissioners, percentage of independent commissioners, and percentage of female commissioners. In total, 186 Indonesian companies that have conducted IPO from 2001 to 2016 were included in this study. This study uses multiple regressions to test the hypothesis. Our findings show that ownership retention has a negative implication on underpricing. Furthermore, the number of board of commissioners and independent commissioners has also been determined to reduce the level of underpricing. However, female commissioners were found to have no significant effect on IPO underpricing; furthermore, it demonstrated no significant effect in reducing the level of underpricing. These results show that higher ownership retention, a smaller number of board members, and a higher percentage of independent commissioners can reduce IPO underpricing.JEL Classification: G30, G32How to Cite:Setiawan, D., Prabowo, M. A., Trinugroho, I., & Noordin, B. A. A. (2021). Board of Commissioners’ Structure, Ownership Retention, and IPO Underpricing: Evidence from Indonesia. Etikonomi, 20(1), 185 – 200. https://doi.org/10.15408/etk.v20i1.19156.

This study investigates the effect of the growth of financial technology payment on bank fee-based income by studying conventional banks in Indonesia from 2012 to 2019. We employ Random Effect (RE) to estimate our empirical model. Fintech payment is measured by using the log of volume transactions made by fintech payment firms. Our result shows a negative and significant relationship between fintech payment and bank fee-based income. This result indicating that, in general, fintech payment disrupts banks’ fee based-income. In particular, we find that fintech is a complement for small commercial banks.How to Cite:Kando, S., & Trinugroho, I. (2022). The Impact of Fintech Payment on Bank Fee-Based Income. Signifikan: Jurnal Ilmu Ekonomi, 11(2), 425-436. https://doi.org/10.15408/sjie.v11i2.26809.JEL Classification: G18, G21, G28

This activity will be carried at Mlese Cawas Klaten, Central Java. This area has potential that has been passed down from generation to generation to produce traditional striated fabrics and processed products. The people living around the area are mostly weavers and weaving workers. The village has the potential to develop lurik weaving skills. The main problems that exist for the craftsmen include management problems, especially marketing problems, production processes that are not optimal and have not carried out efficiency. This service activity will be carried out using several approaches, including conducting training in management and skills, training on web-based marketing methods for craftsmen and applying skir technology for efficiency of the production process.

A substantial proportion of Indonesian households in Indonesia depend on micro and small enterprises for their income. Mobile phone and internet penetration is expected to substantially drive micro and small enterprises to use technological-based innovation which eventually will improve the productivity and efficiency of those firms. In this paper, using a survey of 2,222 micro and small enterprises in Indonesia, we estimate an empirical model on the determinants of the use of technological-based innovation including digital finance technologies and online sales for micro and small enterprises. By doing so, we are able to improve understanding of the barriers to micro and small business use of digital technologies in Indonesia. Our results reveal that some business factors as well as firm and owner characteristics play significant role in explaining the barriers of adopting digital innovation. We also find that firms with higher income and selling during Covid-19 pandemic mostly adopt digital technologies in their business activity.

This paper examines the determinants of bank margins in Indonesian Islamic rural banks. We find that bank margins are affected mainly by competition and diversification. In this less competitive market, Islamic rural banks are able to set high margins. Islamic rural banks are also tend set high margins when they do not diversify their revenue, referring to the cross-subsidization strategy. We also find that the impact of competition and diversification on bank margins are more pronounced in the banks with lower banks’ loan contract diversification and also banks with a higher proportion of profit-and-loss sharing (PLS) lending. However, those impacts diminish when Islamic banks are located in provinces with above-average numbers of Muslims and located outside Java. Our empirical results therefore also suggest that regional differences matter for bank margins. Keywords: Bank margins, Competition, Diversification, Islamic rural banks, Indonesia, JEL classifications: G21, D40, L25, O18

We examine the impact of foreign presence on domestic banks’ performance by studying conventional commercial banks in Indonesia. We use monthly financial information of 97 commercial banks from 2003 through 2013 resulting in 8,600 observations. We use a panel data regression (Panel Least Square method) to test our hypotheses. Our results show that overall, foreign presence decreases the performance of domestic banks. Going deeper, we find that foreign presence reduces state-owned banks’ profitability as well as private domestic banks’ profitability. However, there is no significant effect of foreign presence on the performance of regional development banks. Little evidence found on the effect of foreign presence on overhead cost.DOI:10.15408/etk.v17i2.7769

Studies show that the impact of financial markets on innovation is mixed. This paper examines whether financial development can help explain the pace of innovation in 68 developed and developing countries during 1995–2018. By utilizing panel data and incorporating market institutions (market creating, market regulating, market stabilizing, and market legitimizing), we discovered a nonlinear effect in the finance–innovation relationship. Market institutions would enhance such a relationship, and the credit and equity market development levels are beneficial to a country's innovation only up to a certain threshold. The findings reveal a difference between developed and developing countries in terms of innovation, and more innovation activities are observed after the 2007–2009 global financial crisis.

A substantial part of households and micro enterprises, particularly in developing countries including Indonesia, did not have access to formal financial institutions which then lead them to borrow money from illegal loan providers. Using an experimental study, we tested whether predatory loan, an illegal short-term loan with high-interest rate, was preferable or not by comparing with pawnshop loan, bank loan and household’s limited saving when households confront with financial distress. We divided the participants into three groups: lower low, low, and upper low income. We found that predatory loan was preferable especially for the lower low and low-income group. Result also confirmed that even if the predatory loan charge was increased, the lower low- and low-income groups still prefer to ease their financial distress through predatory loans. Moreover, the longer the duration of the predatory loan, the higher its probability to be chosen as a funding source in times of household financial distress. DOI: https://doi.org/10.26905/jkdp.v21i3.1261

Financial technology could be an effective tool to achieve financial inclusion. However, it needed a certain level of readiness of society. In this paper, we investigated the determinants of readiness in the implementation of digital financial services which led to cashless society. We did a survey on 993 adults in a province in Indonesia using proportional sampling technique. Estimated using ordinary least square, our empirical results showed that readiness perception had high correlation with the quality of supporting infrastructure. By taking into account some demographic factors, we found that more educated and younger people had high spirit to adopt this system. Evidence showed that men were more enthusiastic in using such technological-based system. However, we did not find an evidence on the difference of readiness perception between those living in rural and those living urban areas. Teknologi keuangan dapat menjadi suatu alat yang efektif untuk mencapai inklusi keuangan. Namun, itu memerlukan tingkat kesiapan masyarakat yang cukup. Dalam paper ini, kami meneliti determinan dari kesiapan implementasi layanan keuangan digital yang mendorong pada masyarakat non-tunai. Kami melakukan survei pada 993 orang dewasa in suatu provinsi di Indonesia dengan menggunakan metode pengambilan sampel proporsional. Diestimasi menggunakan ordinary least square, hasil empiris kami menunjukkan bahwa persepsi kesiapan berkorelasi tinggi dengan kualitas dari infrastruktur pendukung. Dengan memasukkan beberapa faktor demografi, kami menemukan bahwa orang yang lebih teredukasi dan lebih muda bersemangat untuk mengadopsi sistem ini. Sedikit bukti ditemukan bahwa laki-laki lebih antusias untuk menggunakan sistem berbasis teknologi tersebut. Namun demikian, kami tidak menemukan bukti mengenai perbedaaan persepsi kesiapan antara mereka yang tinggal di daerah pedesaan dan perkotaan.

Over the last decade, most credit-industries registered a decline in lending volumes, while factoring industries instead registered a substantial growth in terms of turnover. Surprisingly, only a handful of papers so far investigate factoring companies. Do factoring firms display the same stability levels of banks? Is the competition similar in factoring and banking industries? Is the relationship between competition and stability the same in these industries? Focusing on Italy (one of the largest factoring and banking markets in Europe) and using a unique dataset, we show three main results: factoring companies are (on average) more stable than banks; 2) the stability of factoring companies increase when competition declines (competition-fragility view); 3) the competition-fragility view is weaker in the factoring industry than in the banking industry. Our findings indicate that competition in the Italian credit industry was greater in factoring than in banking.

Purpose This research aims to examine the effect of ownership structure on dividend policy using the Indonesian context. The most common ownership structure is concentrated in the hand of family owners except in the UK and USA (La Porta et al., 1998, 2000). Family owners hold more than half of the companies in Indonesia (Carney & Child, 2013; Claessens et al., 2000). Family firms play an important role in Indonesia. Another important characteristic that emerges is the rise of government- and foreign-controlled firms in Indonesia. Thus, this research also divides ownership concentration into family firms, government-controlled and foreign-controlled firms. Design/methodology/approach Samples of this research consist of dividend announcements during 2006-2012 in Indonesian Stock Exchange. This research excluded financial data because these have characteristics that are different non-financial sectors’ characteristics. The final sample of this research consists of a 710 firm-year observation. Findings The result of this research shows that ownerships have a positive effect on dividend payout. This research divides the sample into family-controlled firms, government-controlled firms (GOEs) and foreign-controlled firms. This research shows that government- and foreign-controlled firms have a positive impact on dividend payout. However, family firms have a negative effect on the dividend payout. Family firms pay lower dividends because they prefer to control it themselves. Family firms earn benefit from those resources, but at the expense of minority shareholders. Thus, family firms engage in expropriation to minority shareholders. Research limitations/implications This study focuses on ownership structure of Indonesian listed firm. This study does not analyze the impact of other corporate governance mechanism such as board structure on dividend decisions. The owner of the companies (family, government and foreign firm) has an opportunity to put their member as part of board members. However, this study does not analyze the impact of board structure on dividend decisions. Originality/value This study provides evidence that ownership concentration positively affects dividend payout. However, there is a different effect of ownership structure (family-controlled firms, GOEs and foreign-controlled firm). Government- and foreign-controlled have a positive effect; however, family-controlled firm have a negative effect on dividend payout. Therefore, this study provides evidence of the importance of ownership structure on dividend decision.

We examine how the level deposit insurance coverage affects bank liquidity. We also test the role of ownership in the relationship between deposit insurance coverage and bank liquidity. This study uses quarterly data of Indonesian banks from Q1:2002 - Q2:2008. We argue that the presence of explicit deposit insurance changes a bank‘s behavior in liquidity management in the form of decreasing asset liquidity. We find some evidence on the negative impact of deposit insurance coverage on bank liquidity. However, little is found on the role of ownership structure. The credibility of deposit insurance system and implicit guarantee are the main policy implications.

Income inequality is a source of social instability and armed conflict, which in turn are detrimental to economic development. This study examines the role of innovation in income inequality in twenty-three developed countries, using a panel mean group estimator that takes cross-sectional dependence into consideration. Three income inequality indicators are used: the Standardized World Income Inequality Database (SWIID), the University of Texas Inequality Project (UTIP), and the Estimated Household Income Inequality (EHII). The innovation indicators are patent applications and patents granted. The empirical results based on the common correlated effect mean group (CCEMG) reveal that innovation widens income inequality. We also investigate whether the innovation–income inequality nexus is subject to a country’s level of globalization and financial development. The findings suggest that the interaction terms between innovation with these two variables have positive effects on income inequality, whereas innovation failed to reduce income inequality. Globalization and financial development are found to drive income inequality. The empirical results are robust to different income inequality and innovation measures as well as estimation techniques.

In this paper, we extend the literature on the discipline imposed by depositors on banks by disentangling the impact of macro risk and micro risk. We also take advantage of a unique dataset in which depositors are split into different categories of deposit size in different types of banks (bank ownership structure). We consider the Banking Stability Index, which is used by the Indonesia Deposit Insurance Corporation as a dashboard to monitor banking stability at the country level as well as individual stability measures such as the Z-score. Using monthly data from 2005 to 2013, our findings show that both macro and micro levels of risk are considered by depositors to discipline banks. Large uninsured depositors are more effective at disciplining banks, highlighting the credibility of the insurance system that is in place. Bank ownership type also matters in explaining the difference in market discipline by depositors.

International audience; In this paper, we extend the literature on the discipline imposed by depositors to banks by disentangling the impact of macro risk and micro risk. We also take advantage of a unique dataset in which depositors are split into different categories of deposit size in different types of banks (bank ownership structure). We consider the Banking Stability Index, which is used by the Indonesia Deposit Insurance Corporation as a dashboard to monitor the banking stability at the country level as well as individual stability measures such as the Z-score. Using monthly data from 2005 to 2013 our findings show that both macro and micro levels of risk are considered by depositors to discipline banks. Large uninsured depositors are more effective in disciplining banks highlighting the credibility of the insurance system in place. Bank ownership type also matters in explaining the difference in market discipline by depositors.

This paper examines the impact of market competition on the stability of Islamic and conventional banks in countries where these banks operate alongside one another. To investigate this issue, we use a sample of 100 Islamic and 390 conventional banks from 19 countries. Our baseline result shows that competition in a dual market erodes banks' stability. The heightened competitive pressure in a dual market encourages banks to engage in excessive risk-taking that can jeopardize their stability. However, the effect of competition is missing for Islamic banks, suggesting their superiority in having religious clients. Although our overall results support the 'competition-fragility' hypothesis, we find that competition can be beneficial for banks, especially at a low to medium competition level. Last, we also find that the adverse impact of competition can be reduced by having high capitalization, especially in the case of a conventional bank. Some policy implications are discussed in the paper.

This symposium issue of Emerging Markets Finance and Trade contains selected articles from the 4th Sebelas Maret International Conference on Business, Economics and Social Sciences (SMICBES) organi...

We investigate the impact of the presence of women in top management on bank performance controlling for bank specific factors, ownership and governance. By making use of sample of 70 Indonesian banks in a cross section study, we find strong evidence that the presence of women in the executives is negatively associated with firm performance. Moreover, we examine the moderating effect of TMT organizational tenure and TMT age. However, only little evidence is found in the effect of our moderating variables.

This paper investigates the impact of banks’ political connections on their ability to collect deposits under two different deposit insurance regimes (blanket guarantee and limited guarantee). We use a unique hand-collected dataset that identifies the political connections of Indonesian commercial banks, from Q1:2002 to Q2:2008. We find that, regardless of their type (state-owned or private entities), politically connected banks are able to attract deposits more easily than their non-connected counterparts. We also show that this effect is more pronounced after the implementation of formal deposit insurance with limited coverage. Our findings have various policy implications. Formal deposit insurance might have improved market discipline, as highlighted by earlier studies, but it has also exacerbated the issue of political connections in the banking sector.

In the last decade, most credit-industries registered a decline in lending volumes, with the exception of the factoring industries that instead registered a substantial increase. Surprisingly, only a handful of papers so far investigate factoring companies. Do factoring firms display the same stability levels of banks? Is the competition similar in factoring and banking industries? Is the link between competition and stability the same in these industries? Focusing on Italy (one of the largest factoring and banking market in Europe) and using a unique dataset, we show three main results; factoring companies are (on average) more stable than banks; 2) the stability of factoring companies increase when competition declines (competition fragility-view); 3) the competition-fragility view is weaker in the factoring industry than in the banking sector.

We take the social or development perspective of government banks on the Indonesian regional development banks. We find that those banks have more employee burden and small scale loans burden than other banks. Excessive employment in the regional development banks is positively associated with the degree of poverty in their regions and negatively related to the regional economic capacity. In the regions with high degree of poverty, those banks have to channel excessive small scale loans.

We examine the information content of the announcements of quantitative easing policy by The Fed in 2008, 2010 and 2012 on the stock price of firms listed in the Indonesia Stock Exchange, more particular firms with liquid stocks included in the list of LQ45. Moreover, we also investigate the determinants of abnormal return by focusing on the effect differences between foreign-controlled and domestic firms as well as between crisis and non-crisis period. Event study and OLS regression are employed to examine our hypotheses. We find that there are significant abnormal returns around the announcement dates both during the crisis and non-crisis period. No evidence is found on the difference between foreign-controlled and domestic firms.

We investigate the determinants of net interest margins of Indonesian banks after the 1997/1998 financial crisis. Using data for 93 Indonesian banks over the 2001-2009 period, we estimate an econometric model using a pooled regression as well as static and dynamic panel regressions. Our results confirm that the structure of loan portfolios matters in the determination of interest margins. Operating costs, market power, risk aversion and liquidity risk have positive impacts on interest margins, while credit risk and cost to income ratio are negatively associated with margins. Our results also corroborate the loss leader hypothesis on cross-subsidization between traditional interest activities and non-interest activities. State- owned banks set higher interest margins than other banks, while margins are lower for large banks and for foreign banks.

We investigated the effect of changes in CEO position on subsequent firm performance by studying 91 CEO turnovers in Indonesia. Our results show that firm performance decreases during the turnover year. Moreover, the incoming CEO does not increase firm performance in subsequent years. Indeed, there is evidence that firm performance decreases after such turnovers. We ultimately conclude that CEO turnovers in Indonesia do not have a positive effect on firm performance. Going further, we divided CEO turnovers into routine and non-routine turnovers on the basis of the turnover process. Both routine and non-routine CEO turnovers show similar results with all samples, in which the incoming CEO in a routine or non-routine turnover does not have a positive effect upon firm performance. Further evidence suggests that the incoming CEO tends to upsize firm assets rather than downsize them.

This paper investigates the relationship between financial development and income inequality by using a broad range of loan categories as proxies for financial development. Our unique data set allows us to identify loans to micro, small and medium-sized enterprises (MSMEs). It also allows us to distinguish business loans and consumer loans. Using panel data for 33 provinces in Indonesia during the 2007-2013 period, we find that lending to MSMEs reduces income inequality while businesses loans, either for working capital or investment purposes, but also consumer loans increase income inequality. Our results indicate that boosting loans to micro, small, and medium-sized enterprises could significantly contribute to reduce income inequality.

The paper reviews the efficiency of food subsidy in Indonesia based on cost structure analysis. Using the comparison between cost of good of government and cost of good of National Logistics Board appointed to manage and channel the subsidy. The level of efficiency has decreased in the recent years because of increase in costs of exploitation, management cost and interest expense. It is suggested that government has to determine the cut-off point as a feasibility assessment of cost of subsidy.