1. bookVolume 9 (2020): Issue 2 (May 2020)
Journal Details
License
Format
Journal
eISSN
2336-9205
First Published
11 Mar 2014
Publication timeframe
3 times per year
Languages
English
access type Open Access

Weighting on Systemic Important Banking (SIB) in Indonesia: The Official Versus PCA Approaches

Published Online: 02 Jun 2020
Volume & Issue: Volume 9 (2020) - Issue 2 (May 2020)
Page range: 155 - 182
Received: 27 Feb 2019
Accepted: 27 Jun 2019
Journal Details
License
Format
Journal
eISSN
2336-9205
First Published
11 Mar 2014
Publication timeframe
3 times per year
Languages
English
Abstract

In determining its Domestic Systemic Important Banking (D-SIB), Indonesia implemented the Global Systemic Important Banking (G-SIB) based on three of five indicators, those being size, interconnectedness, and complexity. Both the G-SIB and the Indonesian D-SIB use an equal weight for each indicator, that is, 1/5 and 1/3 respectively. However, the weight could be modified by using the eigenvector of the Principal Component Analysis (PCA). We showed that this new weighting system was better than the official weighting system (referred to in this paper as the POJK approach) based on the Financial Services Authority (OJK) regulation No.46/POJK.03/2015.

Keywords

JEL Classification

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