Rofikoh Rokhim

Debt and Entrenchment: Evidence from Thailand and Indonesia

This paper examines the relation between debt and corporate governance in emerging market economies. We use firm-level panel data of listed companies from Thailand and Indonesia to analyze the firms corporate financing behaviors in connection with its corporate governance arrangements. Our results show that the debt structure is linked to the corporate governance. We find that weaker corporate governance firms, in particular measured by the entrenchment effects, tend to have a higher debt level. The evidence is relatively stronger during the crisis period. Our results also shed light on the importance of the country-specific institutional settings that would affect the empirical results.

The Increase of Foreign Ownership and its Impact on the Performance, Competition and Risk in the Indonesian Banking Industry

Foreign ownership in Indonesian banking has increased dramatically after deregulation in 1998, following the severe economic crisis. A bank now can have up to 99% foreign ownership. This study aims to investigate the impact of increasing foreign ownership on performance, competition and short-term insolvency risk in the Indonesian banking industry. This study uses financial reports of all (115) commercial banks over a period of six years. Foreign banks are proven to be superior compared to domestic banks in terms of profitability and cost-efficiency. Competition increases with the influx of foreign ownership to the industry which brings more efficiency to it. Nevertheless, insolvency risk builds up too and it should direct policy makers to come out with additional restrictive policies on the liberalisation.

Financial Consumer Protection in Indonesia: Towards Fair Treatment for All

The Indonesian financial system has a long story. Financial system hardly existed before 1966 that is when the commercial banks faced the emergence time. After 1966 under Soeharto governance, central banking and banking sector regulation as the basis of the current financial system in Indonesia was introduced and implemented. After 17 years later, financial structure of Indonesia had the first reformation. In total, there are five phases in Indonesian financial system development between 1966 and the present time (Hamada in Transformation of the Financial Sector in Indonesia, 2003). The first phase, called as formative period, started from 1966 until 1972. The second phase, started from 1973 until 1982, is the period of policy-based finance under soaring oil prices. The third phase, started from 1983 until 1991, is financial-reform period. The fourth phase, started from 1992 until 1997, is the period of financial system’s expansion. The last phase, started from 1998 until present, is the period of financial restructuring, which is in this period the government more concern about consumer protection in financial industry. Financial consumer protection is necessary to increase access and usage of financial services. It can build trust between consumer and financial system, hence in encouraging financial inclusion.

Analyzing key success factors of local economic development in several remote areas in Indonesia

Purpose - The purpose of this paper is to analyze the potential of remote areas in Indonesia and find out the important variables that influence key success factors of Local Economic Regional Development (LERD) program in several areas. Design/methodology/approach - A series of structured interviews were conducted with the chairman and staff of local government, academician, private sectors and locals who are induced to work together to improve quality of life, create new opportunities and fight poverty in Bau-Bau, Singkawang and Kupang. Subsequently, the results from the structured interviews were analyzed using qualitative analysis to arrive at the model of LERD in Indonesia. Findings - The findings show that variables that influence the key success factors of LERD in this research are resources endowment, social capital and local support as independent variables; entrepreneurial strategy as moderating variable; and perceived performance as dependent variable. Research limitations/implications - This study was conducted only in Indonesia which focused on local economic regional development in Indonesia. Despite this limitation, the findings of this study enable the construction of a general model that highlights LERD in chosen areas. The model is also expected to give an idea of how to develop economic region. Originality/value - The paper adds to the literature on LERD by enabling researchers and practitioners to understand the model of LERD in Indonesia.

Jakarta Interbank Spot Dollar Rate (JISDOR) as The Reference Rate: Is It Effective?

This study analyze the influence of non-deliverable forward (NDF) and the spot rate of USD/IDR against Bank Indonesia reference rate, Jakarta Interbank Spot Dollar Rate (JISDOR). NDF which came earlier than JISDOR is used by the market participant as the reference rate. The simple method of NDF determination had a great impact on the volatility of the rupiah currency, pushing the Bank Indonesia to issue its own reference currency. JISDOR is an indication of the rates issued by Bank Indonesia as the reference rate for the foreign exchange market in domestic and overseas. The method of creating the reference rate is by weighting the average rate of real transactions through a monitoring system which is managed by the central bank. However, the question arises: what should be done by the monetary authority when there is a party outside the jurisdiction issued the NDF rate as a benchmark that may affect the domestic exchange rate of rupiah in accordance with the desired agenda of the party. We use OLS and ARCH/GARCH to see if independent variables have an influence on dependent variable. Granger Causality test is also used to observe whether there are any relations among the variables.

Market Anomalies and Intraday Return Indonesia Stock Exchange

This research examined the anomalous Day of The Week Effect which are found in many developed and developing capital markets around the world, occurred in Indonesian capital market. Day of The Week Effect is a phenomenon on stock returns value that are influenced by the trading day. One example of Day of The Week Effect is Monday Effect, which is the stock return value declined or low value on Monday. The data population were Equity Indices which are listed in Indonesia Stock Exchange (IDX ) during October 2012 to March 2013. The data which is primary data that obtained from the IDX, such as Jakarta Composite Index (JCI), BISNIS27, IDX30, and Srikehati. This research split the population data into two balanced data panel that are Q4 2012 (before trading hours regulation changed) and Q1 2013 (after trading hours regulation changed). The results indicate the occurrence of partially Monday Effect in Q4 2012 and partially Weekend Effect in Q1 2013 on the BEI. Test results proved that there is Day of the Week Effect and the day that influence the returns is not always the same and consistent. Monday, Tuesday, Wednesday, Thursday and Friday is alternately affect the return. In addition, the comparisons of return on Monday with another days are not always have large negative return differences and Monday is not always affect the return on each trading interval.