The Balance Sheet Network Analysis for Measuring Systemic Risk of Islamic Commercial Banks in Indonesia

D. Agus Harjito; M. A. B. Hananta Wiratama

doi:10.12816/0047343

Article Details

The Balance Sheet Network Analysis for Measuring Systemic Risk of Islamic Commercial Banks in Indonesia

Authors:

D. Agus Harjito | M. A. B. Hananta Wiratama

Publisher:

IIUM Institute of Islamic Banking and Finance

Main Topics:

Islam, Bábism & Bahá"í Faith

Journal:

Journal of Islamic Finance 2017 Vol.6 Issue (Special Issue), pp.100-113

Document Type:

Article

Publication Date:

1/2017

Document Language:

English

Document ID (Org No.):

118342

Frequency:

Annual

eISSN:

22892117

pISSN:

22892109

DOI:

10.12816/0047343

Descriptors:

Keywords:

Abstract:

 Systemic risk in a simple definition is potential loss suffered by the financial system which is commonly caused bythe individual institution in the system. The default of Bear Sterns and Lehman Brothers in 2008 which were two ofthe five largest investment banks in the U.S at the time has changed the perspective that Too-Big To Fail was notsolely an issue in the vulnerable financial system. Nevertheless, recent studies indicate that Too-Connected To Fail(TCTF) problem is actually the main issue of the vulnerable financial system. This study provides early warningsystem regarding the systemic event by measuring the systemic risk in Indonesian Islamic commercial banks (ICBs).This study employs a balance sheet network analysis to measure the systemic risk in Indonesia ICBs which relies onlyon the interconnection among banks in the system. The purposive sampling method is applied in this study involving10 banks in 2012 and 11 banks in 2013 and 2014. This study investigates the capital loss suffered by an individualinstitution in case of bank default in the system, the Too-Connected to Fail (TCTF) risk which measures how risky theindividual bank towards others and system, and the TCTF vulnerability which measures how vulnerable an individualbank in case of a bank default in the system. It is forecast that this study can be one of the references for the macro prudential and micro prudential supervisions in Indonesia.

Article Details

The Balance Sheet Network Analysis for Measuring Systemic Risk of Islamic Commercial Banks in Indonesia

Authors:

D. Agus Harjito | M. A. B. Hananta Wiratama

Publisher:

IIUM Institute of Islamic Banking and Finance

Main Topics:

Islam, Bábism & Bahá"í Faith

Journal:

Journal of Islamic Finance 2017 Vol.6 Issue (Special Issue), pp.100-113

Document Type:

Article

Publication Date:

1/2017

Document Language:

English

Document ID (Org No.):

118342

Frequency:

Annual

eISSN:

22892117

pISSN:

22892109

DOI:

10.12816/0047343

Descriptors:

ISLAMIC BANKS

COMMERCIAL BANKS

RISK

FINANCIAL LOSS

CAPITAL

ASSETS

LIABILITIES

INDONESIA

Balance Sheet Network

Systemic Risk

Islamic Commercial Banks

Issues

Article Details

Authors: D. Agus Harjito | M. A. B. Hananta Wiratama

Publisher: IIUM Institute of Islamic Banking and Finance

Main Topics: Islam, Bábism & Bahá"í Faith

Journal: Journal of Islamic Finance 2017 Vol.6 Issue (Special Issue), pp.100-113

Document Type: Article

Publication Date: 1/2017

Document Language: English

Document ID (Org No.): 118342

Frequency: Annual

eISSN: 22892117

pISSN: 22892109

DOI: 10.12816/0047343

Descriptors:

Issues

Authors:

D. Agus Harjito | M. A. B. Hananta Wiratama

Publisher:

IIUM Institute of Islamic Banking and Finance

Main Topics:

Islam, Bábism & Bahá"í Faith

Journal:

Journal of Islamic Finance 2017 Vol.6 Issue (Special Issue), pp.100-113

Document Type:

Article

Publication Date:

1/2017

Document Language:

English

Document ID (Org No.):

118342

Frequency:

Annual

eISSN:

22892117

pISSN:

22892109

DOI:

10.12816/0047343