DO PEER BANKS MATTER? IDENTIFYING PEER EFFECTS IN LIQUIDITY HOARDING BEHAVIOR IN INDONESIA

Satiti, Sekar
Husodo, Zaafri Ananto

Prosiding Seminar Nasional dan Call Paper STIE Widya Wiwaha
Vol 4 No 1 (2025): International Seminar Proceedings and Call for Paper STIE Widya Wiwaha

This paper examines the influence of peer effects on liquidity hoarding behavior and banking stability in Indonesia from 2018 to 2025. Using panel data from 44 banks categorized according to the KBMI classification, the estimation results reveal the presence of interbank contagion in liquidity hoarding, whereby banks adjust their liquidity buffers in response to the behavior of other banks. Furthermore, liquidity hoarding has a significantly negative effect on bank stability, as measured by the Z-score, indicating a defensive response by banks amid heightened uncertainty. These findings underscore the importance of monitoring systemic liquidity interactions across banks within Indonesia’s financial system.