The International Journal of Financial Systems
Financial systems form the backbone of modern economies, comprising a complex network of institutions, markets, regulations, and instruments that facilitate the efficient allocation of resources, risk management, and economic growth. Given the increasingly interconnected nature of our global economy, studying financial systems has become imperative for individuals, organisations, and policymakers alike. The development of financial systems is an ongoing process influenced by a myriad of factors, including technological advancements, regulatory frameworks, and changing market dynamics. Over time, financial systems have evolved from traditional, localised models to globalised, technology-driven ecosystems. Innovations such as digital banking, mobile payments, blockchain technology, and algorithmic trading have revolutionised financial transactions, reshaping the landscape of financial systems. Research on financial systems holds immense importance, as it delves into the intricacies and complexities associated with these systems. By examining various facets such as financial institutions, markets, instruments, regulatory frameworks, and risk management practices, researchers contribute to our understanding of how financial systems function, their efficiency, and their stability. Policymakers rely on this research to formulate effective regulations and policies that promote stability, enhance resilience, and mitigate systemic risks within financial systems. Furthermore, practitioners in the field of finance, including bankers, financial analysts, investment managers, and policymakers, benefit greatly from research on financial systems. These insights enable them to make informed decisions, manage risks effectively, and develop strategies that foster financial intermediation, sustainable economic growth, and financial inclusion. SCOPE The International Journal of Financial Systems welcomes papers from researchers, academics, and practitioners worldwide. We specifically invite contributions that address the following key topics: Financial Institutions Financial Instruments Financial Markets Financial Regulations and Policies Financial Inclusion Financial Literacy and Education Islamic Finance Sustainable Finance Innovative Financial Technology Financial System Stability Financial Integration
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The Impact Of Insurtech On The Insurance Business Model In Indonesia
Widyani, Donafeby
The International Journal of Financial Systems Vol. 1 No. 2 (2023)
Publisher : Otoritas Jasa Keuangan
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DOI: 10.61459/ijfs.v1i2.24
In Indonesia, the integration of InsurTech into the business process is beginning to manifest, with emerging companies harnessing technology across various aspects, including customer acquisition, underwriting, claims, billing, and customer service. Furthermore, established companies are incorporating technology into specific facets of their business processes to improve overall efficiency and accuracy. Thus, it is intriguing to delve deeper to the phenomenon to understand what factors are driving the growth of InsurTech there, how it spurs business model innovation, what gaps exist between the country’s current insurance business models and the models required for development, and what capabilities existing insurance companies need to fill in these gaps. This is a qualitative study that interviewed 10 participants, which are C-level executives in ten major national and multinational insurance companies in Indonesia. The finding revealed that efficiency gains, achieved through streamlined processes and cost reduction, drive significant investments in InsurTech. Regulatory challenges and technological advancements shape the trajectory of InsurTech. The direct insurer consumer relationship facilitated by InsurTech enhances speed, ease, and transparency in insurance processes. However, challenges such as underdeveloped business models and resistance to innovation exist. Successful InsurTech integration requires a holistic approach, combining creative thinking, supportive leadership, and industry collaboration. InsurTech not only enhances customer experiences but also holds promise for sustainable business growth through operational optimisation in the Indonesian insurance sector.
How Did Depositors React to Bank Risks During the Covid-19 Outbreak in Indonesia?
Tumbelaka, Indra
The International Journal of Financial Systems Vol. 1 No. 2 (2023)
Publisher : Otoritas Jasa Keuangan
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DOI: 10.61459/ijfs.v1i2.27
The Covid-19 outbreak provides a unique setting to examine the association between deposits and bank risk, including loan risk, as both deposits and loan risk increased significantly during the outbreak. Employing dynamic regression models in datasets from the Indonesian banking industry before and during the Covid-19 outbreak, this study provides new evidence that depositor discipline is stronger during the outbreak, as depositors are more sensitive to loan risk. The findings are different from prior studies in that depositor discipline tends to diminish during the crisis period. Furthermore, this study confirms the effectiveness of the deposit insurance system implementation, as uninsured depositors exercise stronger discipline. Last but not least, this study documents that depositor discipline is weaker in government banks as those banks are perceived as having implicit guarantees from the government.
Regulating Crypto Assets: Understanding Stablecoins and Unbacked Crypto Assets Systemic Implication on the Financial Market
Jausyan, Maulana Ahmad Rayhan Al;
Obed Juan Benito
The International Journal of Financial Systems Vol. 1 No. 2 (2023)
Publisher : Otoritas Jasa Keuangan
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DOI: 10.61459/ijfs.v1i2.29
To bring clarity to the emerging regulatory concerns, this study employs GARCH and TVP-VAR models to compare stablecoins and unbacked crypto assets' profiles and their systemic implications to the financial market. Using daily price data, it reveals that stablecoins are more stable than unbacked crypto assets while both are having weak connectivity at the same time. Moreover, stablecoins exert a more significant systemic impact on the financial market. The time-varying analysis also indicates high connectivity between crypto assets and traditional financial assets during crisis. These findings inform regulatory frameworks, ensuring stability in the financial system while promoting fintech innovation.
Evaluation of the Productivity Performance of BPR for Economic Resilience in East Java: A View from Efficiency and Technological Change
Aufa, Aufa;
Maripatul Uula, Mimma;
Maulida, Syahdatul
The International Journal of Financial Systems Vol. 1 No. 2 (2023)
Publisher : Otoritas Jasa Keuangan
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DOI: 10.61459/ijfs.v1i2.33
The Rural Bank (BPR) plays a crucial role in the Indonesian banking industry, particularly at the regional level, serving as an alternative financ-ing source for the unbankable population. This research aims to analyse the productivity levels of BPRs in East Java using the Malmquist Pro-ductivity Index (MPI) during the period from 2016 to 2022. The study sample comprises 30 BPRs in East Java. The analysis results indicate that the productivity of BPRs in East Java fluc-tuates from year to year. Moreover, during the COVID-19 pandemic, BPR productivity experi-enced a significant decline. The study provides recommendations for BPR management and regulators to pay more attention to BPR pro-ductivity and decision-making foundations.
Determinants of BPR Competitiveness in New Normal Era: Empirical Study in Indonesia
Sipahutar, Ida Rumondang;
Sari, Evita;
Warman, Azizah Surayya
The International Journal of Financial Systems Vol. 1 No. 2 (2023)
Publisher : Otoritas Jasa Keuangan
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DOI: 10.61459/ijfs.v1i2.38
As the rural bank in Indonesia, Bank Perkreditan Rakyat (BPR) serves people with limited products and services and is less regulated compared to Commercial Banks. During the COVID-19 pandemic, the growth rate of BPR slowed down. We developed a hypothesis on the negative influence of financial technology (fintech) on the competitiveness and performance of BPR. Using all BPR companies and 22 Fintech Lending companies as samples to measure the HHI and Lerner Index, we found that BPR and Fintech Lending companies were competing in an unconcentrated market. Several variables could not be examined while studying the determinants of BPR’s competitiveness, including Regional GDP, BOPO, third party funds, Loan Credit, ROE, NIM, and CAR. Several determinants, such as the NPL, Fintech Lending, and COVID-19 pandemic, were found to have significant negative impacts on the BPR’s competitiveness. Interestingly, BPR’s banking digitalization, as represented by its IT capability, was found to be not significant in this study.