Research Article
Blanket Guarantee for Stabilization or Moral Hazard? Study Cases: Conventional Bank in Indonesia
@INPROCEEDINGS{10.4108/eai.13-9-2023.2341214, author={Dian Fajarini and Nurbetty Herlina Sitorus and Thomas Andrian}, title={Blanket Guarantee for Stabilization or Moral Hazard? Study Cases: Conventional Bank in Indonesia}, proceedings={Proceedings of the 6th International Conference of Economics, Business, and Entrepreneurship, ICEBE 2023, 13-14 September 2023, Bandar Lampung, Indonesia}, publisher={EAI}, proceedings_a={ICEBE}, year={2023}, month={12}, keywords={blanket guarantee financial stability moral hazard}, doi={10.4108/eai.13-9-2023.2341214} }- Dian Fajarini
Nurbetty Herlina Sitorus
Thomas Andrian
Year: 2023
Blanket Guarantee for Stabilization or Moral Hazard? Study Cases: Conventional Bank in Indonesia
ICEBE
EAI
DOI: 10.4108/eai.13-9-2023.2341214
Abstract
Indonesian Deposit Insurance Corporation through Law No. 2 of 2020 enhance the Blanket Guarantee Mandate to a Risk Minimizer. A larger mandate implies greater authority for the Deposit Insurance Corporation in supporting the stability of the banking system. On the other hand, the Blanket Guarantee program has raised concerns about moral hazard in banks. Therefore, this research will analyse whether the Blanket Guarantee program through its risk minimizer function can improve financial system stability or create moral hazard. Research will be conducted on Conventional Banks from 2018 – 2021 with panel data analysis by two research models. The first and second model will show whether the blanket guarantee program encourages financial system stability or triggers the emergence of moral hazard. The research results show that the blanket guarantee program creates stabilization and does not cause moral hazard in conventional banks.