The role of regulatory authority in maintaining financial security in the Indonesian banking sector: A legal framework analysis

Emmi Rahmiwita Nasution

doi:10.35335/ijopsor.v11i3.209

Authors

Emmi Rahmiwita Nasution Universitas Asahan, Indonesia

DOI:

https://doi.org/10.35335/ijopsor.v11i3.209

Keywords:

Banking, Financial , Indonesia, Regulatory Authority, Security

Abstract

This research aims to look at the Role of Regulatory Authority in Maintaining Financial Security in the Indonesian Banking Sector: A Legal Framework Analysis. By utilizing a multifaceted methodology that includes an examination of regulatory frameworks, case studies, and legal frameworks. The results of this study offer a thorough understanding of the complexities inherent in the regulatory environment governing banking in Indonesia. The clarity, enforceability, and adaptability of the legal framework are critically examined, while historical case studies provide an overview of regulatory reactions and the flexibility of the legal framework. The regulatory review provides a comprehensive analysis of organizational resilience, operational effectiveness, and stakeholder viewpoints. The integration of these findings contributes to targeted recommendations to strengthen the regulatory environment and ensure the continued financial security of the Indonesian banking sector.

References

Alexandra, L., & Dzakwan, M. H. A. (2022). Indonesia: COVID-19 and Risk of Atrocity. In Covid-19 and Atrocity Prevention in East Asia (pp. 22–44). Routledge.

Amalia, A. R., & Firmansyah, A. (2022). Debt policy, sales growth, tax avoidance: the moderating role of independent commissioners. International Journal of Contemporary Accounting, 4(2), 97–114.

Awaluddin, M. R., Haliah, H., & Kusumawati, A. (2023). The Effects of Non Performing Loan and Loan to Deposit Ratio toward Return on Asset. International Journal Of Humanities Education and Social Sciences (IJHESS), 2(6).

Bajwa, I. A., Siddiqui, K. A., Eltayeb, T., & Chaudhry, K. M. (2021). Mapping the strategic landscape for global financial institutions through brand equity trend analysis. Entrepreneurship and Sustainability Issues, 9(1), 401.

Barth, J. R. (2019). Regulatory responses by countries to banking/financial crises. In Journal of Risk and Financial Management (Vol. 13, Issue 1, p. 1). MDPI.

Buckley, R. P. (2016). Reconceptualizing the Regulation of Global Finance. Oxford Journal of Legal Studies, 36(2), 242–271.

Calani, M., & Paillacar, M. (2022). The pass-through of loan-loss-provisioning on mortgage lending: Evidence from a regulatory change. Journal of Banking & Finance, 135, 106359.

Chu, Y., & Zhao, D. (2023). Access to public capital markets and bank lending. Real Estate Economics.

Cociug, V., & Mistrean, L. (2022). Macroprudential Policy Contribution to the Post-COVID-19 Pandemic Economic Recovery. In Managing Risk and Decision Making in Times of Economic Distress, Part B (pp. 1–16). Emerald Publishing Limited.

Coglianese, C. (2022). 19. Managing the performance of regulatory agencies. Handbook of Regulatory Authorities, 285.

Coombs, N. (2022). Narrating imagined crises: How central bank storytelling exerts infrastructural power. Economy and Society, 51(4), 679–702.

Endovitsky, D. A., & Korotkikh, V. V. (2022). Regime shifts in equity risk premium: international evidence. Proceedings of Voronezh State University. Series: Economics and Management, 1.

Fadlurohman, R., & Mufidi, M. F. (2023). Wanprestasi atas Perjanjian Jasa Promosi oleh Influencer pada Media Sosial Ditinjau dari Perspektif KUH Perdata. Bandung Conference Series: Law Studies, 3(1), 784–790.

Fahy, L. A. (2022). Regulator reputation and the successful governance of innovation: Lessons from financial technology supervision. Utrecht University.

Fenwick, M., & Vermeulen, E. P. M. (2021). The future of finance: Why regulation matters. In The Routledge Handbook of FinTech (pp. 38–50). Routledge.

Fitriana, D., & Wijanarko, D. S. (2022). Legal Urgence for Registration and Establishment of Legal Fintech Companies Based on Information Technology Authority Regulation Number 77/Pojk. 01/2016 Concerning Money-Base Loan Services and Bank Indonesia Regulation Number 19/12/Pbi/2017 Concerning. Journal of Law, Politic and Humanities, 3(1), 214–226.

Fritz, B., de Paula, L. F., & Prates, D. (2022). Currency hierarchy and financial globalization in emerging economies: how far does Riese’s critique of growth by external debt still hold? European Journal of Economics and Economic Policies: Intervention, 19(2), 260–277.

Gu, J., Gouliamos, K., Lobonţ, O.-R., & Nicoleta-Claudia, M. (2021). Is the fourth industrial revolution transforming the relationship between financial development and its determinants in emerging economies? Technological Forecasting and Social Change, 165, 120563.

Gujadhur, P. (2022). Navigating through adversity: An assessment of Mauritius Commercial Bank’s performance during the covid era.

Herlina, E. (2017). Governance in Indonesia banking industries as an effort to improve their national competitive-ness. Journal of Economics, Business, & Accountancy Ventura, 20(2), 149–160.

Ihsan, R., & Munabari, F. (2023). The Gas and Brake Policy: Indonesia’s COVID-19 Securitization Dilemmas. TRaNS: Trans-Regional and-National Studies of Southeast Asia, 11(1), 103–119.

Kanitkar, T. (2020). The COVID-19 lockdown in India: Impacts on the economy and the power sector. Global Transitions, 2, 150–156.

Karuniasa, M., Indrawan, M., Haryanto, J. T., Rulliadi, D., Hindarto, D. E., Bassar, E., Halimatussadiah, A., Impron, Aldrian, E., & Atmoko, A. W. (2023). Climate Action in a Far-Flung Archipelagic Nation: Outlining Challenges in Capacity-Building. In Environmental Governance in Indonesia (pp. 379–403). Springer International Publishing Cham.

Khadijah, E., & Afifah, D. (2022). Bank Soundness Level Analysis Using Method Risk-Based Bank Rating (RBBR) at PT Bank Negara Indonesia (Persero), Tbk period 2018-2020. International Journal Management and Economic, 1(2), 39–48.

Kusuma, F. W. (2023). The Effect of Financial Services Authority Regulatory Implementation Concerning Financial Consumer Protection on Banking Financial Performance. Eduvest-Journal of Universal Studies, 3(7), 1289–1302.

Law, S. H., & Ridhwan, M. M. (2022). Effect Of Islamic Financial System Stability On Economic Performance In Indonesia. Journal of Islamic Monetary Economics and Finance, 8(3), 371–406.

Leon, F. M., Chandra, K., & Sari, W. R. (2023). Structure, Conduct, and Performance of the Indonesian Banking Sector with Moderating Pandemic COVID-19 towards a Sustainable Banking Business. Journal of Economics, Management and Trade, 29(8), 113–129.

Liao, Y., & Pan, Z. (2022). Extreme risk connectedness among global major financial institutions: Links to globalization and emerging market fear. Pacific-Basin Finance Journal, 76, 101862.

Lopes, A., Butzbach, O., & Imbriani, C. (2023). Banking regulation, credit supply, and Uneven regional development. An exploratory comparison of Italy and Germany. INTERNATIONAL JOURNAL OF BUSINESS AND APPLIED SOCIAL SCIENCE, 9(3), 1–14.

Manzini, D., Oosthuizen, R., & Chikwanda, H. K. (2022). A Resilience Framework for Digital Transformation in the Banking Sector: A Systems Thinking Approach. 2022 IEEE 28th International Conference on Engineering, Technology and Innovation (ICE/ITMC) & 31st International Association For Management of Technology (IAMOT) Joint Conference, 1–10.

Marsella, P., & Pangestuti, D. C. (2023). Assessment of bank’s health using analysis risk profile, good corporate governance, earnings, capital (RGEC). International Journal of Research in Business and Social Science (2147-4478), 12(3), 237–248.

Martono, R. P. D., & Arifin, Z. (2019). Stock Price Response to Bank ’ s Health Components Information : Study on Banks Listed in Indonesia Stock Exchange. Proceeding of The 3rd International Conference on Accounting, Business & Economics (UII-ICABE 2019), 2016, 194–200.

Mulja, S., & Kim, S. S. (2023). Efek Dari Makro, Industri dan Karakter Spesifik Perusahaan Terhadap Non Performing Loan Di Indonesia. Owner: Riset Dan Jurnal Akuntansi, 7(2), 1367–1381.

Murthy, N., & Gopalkrishnan, S. (2023). Creating a Nexus between dark triad personalities, non-performing assets, corporate governance and frauds in the Indian Banking sector. Journal of Financial Crime, 30(4), 859–876.

Murwadji, T. (2018). Green Banking: The Model and Its Implementation. Envtl. Pol’y & L., 48, 219.

Muslum, M. (2022). BANKING REGULATION IN CONDITIONS OF FINANCIAL INSTABILITY: NEW CHALLENGES, ANTI-CRISIS MEASURES, PROMISING VECTORS. Publishing House “Baltija Publishing.”

Nasution, B. H., & Agustina, R. (2023). Urgensi Penerapan Konsep Green Banking di Indonesia. DOKTRINA: JOURNAL OF LAW, 6(1), 73–81.

Nursahla, R. S. A., Paramayoga, N., Fadli, M. A., & Hamidi, M. P. (2023). LEGAL ASPECTS OF THE CENTRAL BANK’S GREEN FINANCE INSTRUMENTS IN INDONESIA: AN OVERVIEW. Journal of Central Banking Law and Institutions, 2(1), 123–152.

Octaviani, I., & Mongid, A. (n.d.). The Effect of GCG, Credit Risk, Size and Liquidity Risk on the Performance of National Foreign Exchange Commercial Banks in Indonesia.

Orlin, S., Wijovi, F., Evangelista, N. N., Angelina, S., Halim, D. A., Hamdoyo, A., Hariyanto, T. I., Cipta, D. A., & Kurniawan, A. (2023). THE DEPRESSIVE AND ANXIETY SYMPTOMS AND PSYCHOLOGICAL DISTRESS AMONG INDONESIAN ADULTS DURING COVID-19 PANDEMIC. The Indonesian Journal of Public Health, 18(1), 117–129.

Pagliari, S., & Wilf, M. (2021). Regulatory novelty after financial crises: Evidence from international banking and securities standards, 1975–2016. Regulation & Governance, 15(3), 933–951.

Pathrose, E. P. (2022). The Real Effect and Consequence of Regulation Reform in Corporate Finance and Banking. ECS Transactions, 107(1), 4195.

Potjagailo, G., & Wolters, M. H. (2023). Global financial cycles since 1880. Journal of International Money and Finance, 131, 102801.

Puspitasari, N., Jururi, S., & Hidayat, S. E. (2023). Effects of Internal Finance, Islamic Governance and Islamic Corporate Responsibility on Profitability: Evidence of Islamic Banking in Indonesia. International Journal of Professional Business Review: Int. J. Prof. Bus. Rev., 8(5), 112.

Read, C. (2023). The Ideas and Policies of the Banking School. In Calming the Storms: The Carry Trade, the Banking School and British Financial Crises Since 1825 (pp. 55–90). Springer.

Riess, L., Beiglböck, M., Temme, J., Wolf, A., & Backhoff, J. (2023). The geometry of financial institutions--Wasserstein clustering of financial data. ArXiv Preprint ArXiv:2305.03565.

Rosalina, L., & Wahyuningsih, D. (2023). Impact of financial inclusion and banking characteristics on banking stability in Indonesia. Jurnal Perspektif Pembiayaan Dan Pembangunan Daerah, 11(1), 79–92.

Rudy, & Ali, C. (2023). Public Health or Economic Recovery: Regulatory Choice Against COVID-19 in Indonesia. In Changing Law and Contractual Relations under COVID-19: Reallocation of Social Risks in Asian SME Sectors (pp. 43–54). Springer.

Saputra, I., Murwaningsari, E., & Augustine, Y. (2023). The Role of Enterprise Risk Management And Digital Transformation On Sustainable Banking In Indonesia. Neo Journal of Economy and Social Humanities, 2(1), 17–30.

Sasongko, H., & Yusnita, N. (2023). The Influence of Productive Asset Quality, Loan to Deposit Ratio, Non Performing Loan, and Operating Expenses to Operating Income on Profit with Capital Adequacy Ratio as Moderating Variable in Indonesian Banking. Jurnal Manajemen Dan Keuangan, 12(1), 141–163.

Sharma, P., & Banerjee, T. (2022). Assessing Regulatory Responses to Banking Crises. Federal Research Bank of Kansas City.

Shavshukov, V. M., & Zhuravleva, N. A. (2023). National and International Financial Market Regulation and Supervision Systems: Challenges and Solutions. Journal of Risk and Financial Management, 16(6), 289.

Shely, S. (2023). Analysis of the Application of Banking Principles Related to Loss of Priority Customer Funds (Case Study of PT. Bank Rakyat Indonesia Tbk Takengon Branch Office). International Journal of Social Science, Education, Communication and Economics (SINOMICS JOURNAL), 2(2), 283–290.

Singh, D. (2012). Banking regulation of UK and US financial markets. Ashgate Publishing, Ltd.

Sudarwanto, A. S., & Kharisma, D. B. (2023). Law enforcement against investment fraud: a comparison study from the USA and Canada with a case study on binary options in Indonesia. Safer Communities.

Sulistiyowati, L. N., Sari, P. O., & Purwaningsih, A. N. (2022). the Effectiveness of Restructuring Policy in Bumn Banks During the Pandemic. Die, 13(2), 175–184. https://doi.org/10.30996/die.v13i2.7299

Tabe, R., Niode, O. S., & Majid, J. (2023). WORKING CAPITAL EFFICIENCY, LIQUIDITY, AND SOLVENCY ON PROFITABILITY OF INDONESIAN STATE-PRIVATE BANK. Assets: Jurnal Ekonomi, Manajemen Dan Akuntansi, 13(1), 17–27.

Tanjung, M. (2023). Determinants of corporate governance compliance: what matters and what does not? Journal of Business and Socio-Economic Development, 3(3), 237–252.

Thamae, R. I., & Odhiambo, N. M. (2022). The impact of bank regulation on bank lending: a review of international literature. Journal of Banking Regulation, 23(4), 405–418.

Wahyudi, S. T., Badriyah, N., Nabella, R. S., Sari, K., & Radeetha, R. (n.d.). LINKAGES BETWEEN BANK COMPETITION AND FINANCIAL STABILITY: A COMPARATIVE STUDY OF SHARIA VS CONVENTIONAL BANKING IN INDONESIA. Jurnal Ekonomi Bisnis Dan Kewirausahaan, 12(1).

Winarso, W., & Jaya, I. M. L. M. (n.d.). Macroprudential Inclusive Policy: Strategies for Banking Sustainability in Indonesia During the Covid-19.

Winata, A. S. (2023). KETIDAKPASTIAN HUKUM DALAM PENYELESAIAN SENGKETA BISNIS INTERNASIONAL MELALUI ARBITRASE INTERNASIONAL DI INDONESIA. IBLAM LAW REVIEW, 3(1), 89–98.

Yustie, R., & Kiak, N. T. (2023). Banking Support in Economic Sector Affected by Covid-19 To Support Acceleration of Economic Growth and Overcome the Long-Term Impact. JMM17: Jurnal Ilmu Ekonomi Dan Manajemen, 10(1), 1–8.