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All Journal Jurnal Ekonomi Pembangunan: Kajian Masalah Ekonomi dan Pembangunan Bina Ekonomi: Majalah Ilmiah Fakultas Ekonomi Universitas Katolik Parahyangan
Lim, Charvin
Parahyangan Catholic University
Decision Sciences, Operations Research & Management Economics, Econometrics & Finance Environmental Science

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Loan-to-Value Ratio and Housing Price Cycle: Empirical Evidence From Indonesia Lim, Charvin; Nugraheni, Siwi
Jurnal Ekonomi Pembangunan: Kajian Masalah Ekonomi dan Pembangunan Vol 18, No 2 (2017): JEP 2017
Publisher : Universitas Muhammdaiyah Surakarta

Show Abstract | Download Original | Original Source | Check in Google Scholar | DOI: 10.23917/jep.v18i2.4846

Abstract

The subprime mortgage crisis in 2007-2009 which led to a global recession has highlighted the importance of regulating credit for housing market. The urgency arises not only to manage non-performing ratio, but further to manage price in the housing market which is a potent source of financial imbalance. Loan-to-value (LTV) regulation is imposed in order to dampen the housing price cycle, preventing the occurrence of bubble issue. This study tries to capture the influence of LTV implementation on housing price and assesses its effectiveness in the national scope. Error correction model is used to portray the short and long-term dynamics of housing cycle with regard to policy, macroeconomic, and financial variables. We concluded that LTV is an effective policy to dampen the price cycle in the long run, but not in the short run. In the short run, housing price is closely determined by the macroeconomic factors. Furthermore, we found that the implementation of LTV has made housing price to become more persistent, suggesting a change in the market expectation structure and the behavior of housing price cycle.
Loan-to-Value Ratio and Housing Price Cycle: Empirical Evidence From Indonesia Charvin Lim; Siwi Nugraheni
Jurnal Ekonomi Pembangunan: Kajian Masalah Ekonomi dan Pembangunan Vol 18, No 2 (2017): JEP 2017
Publisher : Muhammadiyah University Press

Show Abstract | Download Original | Original Source | Check in Google Scholar | DOI: 10.23917/jep.v18i2.4846

Abstract

The subprime mortgage crisis in 2007-2009 which led to a global recession has highlighted the importance of regulating credit for housing market. The urgency arises not only to manage non-performing ratio, but further to manage price in the housing market which is a potent source of financial imbalance. Loan-to-value (LTV) regulation is imposed in order to dampen the housing price cycle, preventing the occurrence of bubble issue. This study tries to capture the influence of LTV implementation on housing price and assesses its effectiveness in the national scope. Error correction model is used to portray the short and long-term dynamics of housing cycle with regard to policy, macroeconomic, and financial variables. We concluded that LTV is an effective policy to dampen the price cycle in the long run, but not in the short run. In the short run, housing price is closely determined by the macroeconomic factors. Furthermore, we found that the implementation of LTV has made housing price to become more persistent, suggesting a change in the market expectation structure and the behavior of housing price cycle.
DISENTANGLING INDONESIAN BANKING COMPETITION BASED ON BUKU CLASSIFICATION: IMPLICATIONS ON BANK SOUNDNESS Miryam B.L.S.K. Wijaya; Charvin Lim; Chandra Utama
Bina Ekonomi Vol. 22 No. 2 (2018): Bina Ekonomi: Majalah Ilmiah Fakultas Ekonomi Universitas Katolik Parahyangan
Publisher : Center for Economic Studies Universitas Katolik Parahyangan

Show Abstract | Download Original | Original Source | Check in Google Scholar | Full PDF (7634.921 KB) | DOI: 10.26593/be.v22i2.3833.145-160

Abstract

ABSTRACTCompetition has long been debated as a vital factor determining banking performance and stability. The broad perspectives are divided into two streams, the ‘competition-fragility’ and ‘competition-stability’ view. Banking industry in Indonesia is experiencing consolidation waves as an effort to strengthen capital and enhance intermediation performance. The consolidation, however, inevitably alter the degree of competition. In this study, we propose a detailed assessment of competition effect through disentanglement amongst different bank clusters, particularly with respect to BUKU classification. The separation is done through Fixed Effect Vector Decomposition method, complemented by interaction variables. We found an indication that competition amongst Indonesian banks can be divided into two segments: the first containing BUKU1 and 2, while the latter BUKU3 and 4. Observing 57 banks using monthly data in 2006-2015, our study supports the competition-stability view, suggesting competition has positive influences on bank soundness. Adding more market power to the leader in each segment (BUKU2 and BUKU4, respectively) would have insignificant, if not malign, effect; the opposite for the challenger. Further, aside from competition, we found that interbank interaction promotes soundness.Keywords: competition; bank soundness; fixed effect vector decomposition
Co-Authors Chandra Utama Miryam B Lilian Wijaya Siwi Nugraheni