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
Articles
37 Documents
<![CDATA[Revisiting the Influence of Lending Rate to Indonesia’s Credit Market ]]>
<![CDATA[Luviyanto, Afif Narawangsa]]>;
<![CDATA[Prabowosunu, Mohammad Alvin]]>;
<![CDATA[Pavayosa, Erin Glory]]>
<![CDATA[ The International Journal of Financial Systems Vol. 3 No. 2 (2025) ]]>
Publisher : <![CDATA[Otoritas Jasa Keuangan ]]>
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DOI: 10.61459/ijfs.v3i2.91
<![CDATA[This paper investigates the responsiveness of credit volumes to changes in lending rates in Indonesia and reexamines the strength of the monetary transmission mechanism through the credit channel. Using a vector autoregression framework applied to disaggregated bank credit data by sector, loan type, and firm size, we analyse how policy-driven interest rate movements propagate into actual lending outcomes. The results reveal a markedly uneven transmission: credit to micro, small, and medium enterprises (MSMEs) shows negligible sensitivity to interest rate changes, whereas lending to large firms responds more appreciably. In particular, bank credit to large corporates declines significantly when policy rates rise, consistent with conventional theory, while credit to smaller firms remains largely unaltered. These findings suggest that the traditional interest rate pass-through is fragmented and weak in key segments of the economy, undermining the efficacy of pricebased monetary policy. The analysis points to structural factors, including heterogeneous bank behaviour, borrower constraints, and a propensity of banks to shift toward safer assets in uncertain times as underlying causes. The findings imply the need for a more nuanced policy approach that complements interest rate adjustments with targeted interventions to achieve broad-based credit stimulus and effective monetary control. ]]>
<![CDATA[Optimizing Strategic Economic Pillars for National Resilience: A Study on the Impact of Trump’s 19% Tariff on Indonesia’s Economic Stability ]]>
<![CDATA[Zahra, Khalista Arintyas]]>;
<![CDATA[Kautsar, Farah Amilya]]>;
<![CDATA[Ilma, Ajeng Faizah Nijma]]>
<![CDATA[ The International Journal of Financial Systems Vol. 3 No. 2 (2025) ]]>
Publisher : <![CDATA[Otoritas Jasa Keuangan ]]>
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DOI: 10.61459/ijfs.v3i2.94
<![CDATA[As a global superpower, the United States plays a dominant role in international political and economic dynamics. The election of Donald Trump in 2017, under the “Make America Great Again” agenda, marked a shift toward protectionist trade policies, including higher import tariffs, in response to China’s rapid economic rise, triggering the U.S.–China trade war. Although U.S. import tariffs were subsequently reduced from 32% to 19%, they continued to pose risks to economic stability in developing countries, including Indonesia. This study employs a mixed-methods approach combining qualitative analysis and quantitative tools—SWOT, Internal–External Factor Evaluation (IFE–EFE), and the Analytic Hierarchy Process (AHP) to examine the impact of the trade war on Indonesia’s economic stability and to formulate a prioritized strategic policy mix. The results indicate that strengthening national economic resilience requires a balanced inward- and outward-looking strategy, including export-oriented industrial downstreaming supported by TKBI policies, export market diversification through RCEP and IEU–CEPA partnerships, enhanced utilization of domestic products (P3DN), and the implementation of Local Currency Settlement (LCS). The findings suggest that enhancing economic resilience in developing countries facing protectionist trade shocks requires a coordinated policy mix integrating trade, industrial, monetary, and financial stability policies, while highlighting the strategic role of financial authorities in mitigating transmission risks from global trade disruptions to the domestic financial system.]]>
<![CDATA[Climate Change as a Business Risk: : Perspective from Indonesia’s Banking Sector and Regulators ]]>
<![CDATA[Puspitasari, Indah]]>;
<![CDATA[Faturohman, Taufiq]]>
<![CDATA[ The International Journal of Financial Systems Vol. 4 No. 1 (2026) ]]>
Publisher : <![CDATA[Otoritas Jasa Keuangan ]]>
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DOI: 10.61459/ijfs.v4i1.87
<![CDATA[Climate change is increasingly recognized as one of the most significant risk that impacts economic stability and the financial system, particularly banking. Although several studies have examined climate change as one of the significant risks that must be considered in the banking business, these studies are generally conducted in developed countries. In developing countries, research on this topic is still relatively limited. This study examines how leading Indonesian banks perceive climate change as a business risk and evaluate their preparedness to align climate risk into their risk management concept, and analyze the regulatory responses from the Financial Services Authority and Bank Indonesia. This research designed as a qualitative study and using a semi-structured interviews with executives form eight major commercial banks and key regulators as respondents. This study uses thematic analysis to identify key patterns in institutional readiness and challenges. The findings indicate that although banks demonstrate a strong awareness of climate-related risks, there are still significant gaps in data availability, methodological tools, and regulatory standardization. Furthermore, the research findings highlight the structural gap between international frameworks and domestic implementation capacity. This study provides three main contributions to the literature. First providing empirical evidence from the banking sector in developing countries, particularly Indonesia. Second, presenting an integrated perspective between banks and regulators in viewing climate risk. Third, identifying the main implementation gap between international standard under Basel Committee on Banking Supervision (BCBS) framework and readiness of Indonesian banking sector. ]]>
<![CDATA[Green Loans and Bank Intermediary Costs: : Evidence from Net Interest Margin and Loan Interest in Indonesia ]]>
<![CDATA[Tumbelaka, Indra]]>;
<![CDATA[Handogo, Heru Setyo]]>
<![CDATA[ The International Journal of Financial Systems Vol. 4 No. 1 (2026) ]]>
Publisher : <![CDATA[Otoritas Jasa Keuangan ]]>
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DOI: 10.61459/ijfs.v4i1.100
<![CDATA[Employing a unique dataset of green and non-green loans in Indonesia, we show that banks’ loan allocation in environmentally and non-environmentally friendly activities are associated with bank intermediary costs. Our study utilizes green loan taxonomies released by the Indonesian Financial Services Authority to classify loans into green, transition, and unqualified categories. Using dynamic and static models, as well as GMM and fixed-effects estimators on bank-level panel data, we provide evidence that banks with larger green loan portfolios have lower intermediation costs, whereas banks with larger non-green loan portfolios have higher intermediation costs. We further confirm our findings by showing that green loans are associated with lower bank and loan interest spreads, implying that banks in a developing country consider environmental information in their lending decisions and perceive green loans as less risky. Our study contributes to the literature on net interest margins and green loan pricing in developing countries.]]>
<![CDATA[Does Regulation Trigger Volatility? : Empirical Evidence from the Bitcoin, Ethereum, and Ripple Markets in Indonesia ]]>
<![CDATA[Maulana, Ilham]]>
<![CDATA[ The International Journal of Financial Systems Vol. 4 No. 1 (2026) ]]>
Publisher : <![CDATA[Otoritas Jasa Keuangan ]]>
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DOI: 10.61459/ijfs.v4i1.103
<![CDATA[The implementation of PMK 50/2025 marks a pivotal moment in Indonesia’s digital asset fiscal landscape through the introduction of a 0.21% final income tax and the formal transition of oversight to the Financial Services Authority (OJK). This study empirically examines whether these regulatory changes triggered volatility shocks in three major cryptocurrencies: Bitcoin (BTC), Ethereum (ETH), and Ripple (XRP). Using an ARMA(1,1)-eGARCH(1,1) model with Student-t distribution and USD returns as a global market control, we estimate conditional daily volatility over a three-period framework: Pre Announcement, Post-Announcement, and Post-Implementation. Hypothesis testing employs the Wilcoxon Rank-Sum Test (Mann-Whitney U Test), supplemented by dummy regression with Newey-West HAC standard errors, and structural break tests. The primary results reveal no statistically significant change in conditional volatility following PMK 50/2025 for all three assets (Mann Whitney U, all p>0.05). Notably, the dummy regression identifies a statistically significant reduction in Ethereum’s conditional volatility post-implementation (β=−0.000287, p=0.028), corroborated by a structural break toward stability. All assets exhibit a significant positive asymmetry (γ>0), indicating that positive shocks drive greater volatility than negative shocks — a distinctive crypto-market characteristic. Robustness checks using sGARCH(1,1) confirm the main findings. Overall, the results indicate that PMK 50/2025 was not associated with a statistically significant increase in conditional volatility during the observed event windows. These findings should be interpreted as evidence on conditional volatility response only, and do not constitute a comprehensive assessment of market quality, liquidity, or overall resilience.]]>
<![CDATA[Exploring the Potential Asymmetric Structures in the Causal Relationship between Financial Development and Economic Complexity: : Empirical Insights from Nigeria ]]>
<![CDATA[Olaniyi, Clement Olalekan]]>
<![CDATA[ The International Journal of Financial Systems Vol. 4 No. 1 (2026) ]]>
Publisher : <![CDATA[Otoritas Jasa Keuangan ]]>
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DOI: 10.61459/ijfs.v4i1.104
<![CDATA[This study is one of the earliest to examine the potential asymmetry in the causal relationship between financial development (FD) and economic complexity (ECI), using Nigeria’s dataset for the period 1964-2023. Unlike previous studies, which assume impractical linear and symmetric features in the causal analysis between FD and ECI, this study examines the potential asymmetry. The study employs unit root tests (linear and nonlinear), Hatemi-J’s data decomposition procedure, and a leverage-adjusted bootstrap simulation of Hatemi J’s causality test. The findings reveal robust asymmetric structures in both ECI and FD data distribution. The results indicate neither symmetric nor asymmetric causality between ECI and FD. These findings have some profound implications. On the one hand, it shows that neither Nigeria’s financial sector’s expansionary (positive change components) nor contractionary (negative change components) policies are causal drivers of ECI upgrades or deterioration. On the other hand, ECI-related initiatives lack the causal potency to spur the development of Nigeria’s financial sector. The study concludes that evidence of asymmetric causality between ECI and FD depends on context and scope.]]>
<![CDATA[Electronic Payment in Interbank Settlement in Bangladesh: : An Empirical Study of its Adoption and Forecasting using the ARIMA Model ]]>
<![CDATA[Podder, Bhaskar]]>
<![CDATA[ The International Journal of Financial Systems Vol. 4 No. 1 (2026) ]]>
Publisher : <![CDATA[Otoritas Jasa Keuangan ]]>
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DOI: 10.61459/ijfs.v4i1.115
<![CDATA[For over a decade, the Bangladesh government, regulators, and commercial banks have been investing in the Electronic Payment and Settlement System (EPSS) to accelerate economic development, ensure financial stability, and promote financial inclusion. This study examines the adoption of EPSS in Bangladesh and forecasts its trend. The focus is specifically on a component of EPSS – the Real Time Gross Settlement (RTGS). We analyse the historical trend of EPSS and its traditional substitute in detail. The Box-Jenkins methodology is employed to develop an appropriate autoregressive integrated moving average (ARIMA) model for forecasting the increasing share of EPSS in Bangladesh. Our findings reveal that the share of EPSS will be 93.20% and 57.75% with respect to amount and number, respectively, after about three years. The adoption of EPSS with respect to amount shows a steeper upward trend than its adoption with respect to number. Because RTGS adoption is limited to a certain threshold, the number of small-amount transactions is still captured by traditional substitutes. A pervasive lack of digital financial literacy among a subset of the population also drives the adoption of traditional substitutes. Unlike prior works on digital adoption that are based almost exclusively on consumers’ perceptions, this study is grounded in actual data to investigate the adoption of EPSS and its forecasted trend at a country level. It highlights the effectiveness and shortcomings of EPSS in the context of an emerging economy. Our findings can assist policymakers in formulating strategic decisions for the adoption of electronic payment systems in emerging economies.]]>
