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Introduction/Main Objectives: This study aims to investigate whether competition impacts bank stability. Furthermore, the study also analyzes the role of institutional quality in a country, such as voice and accountability, political stability, government effectiveness, regulatory quality, the rule of law, and control of corruption, forming the effect of competition on bank stability. Background Problem: Analysis of the relationship between competition and bank stability has been at the center of academic and policy debate. However, the theoretical and empirical research has not concluded whether bank competition leads to more or fewer stable banks. Novelty: We consider institutional quality's role in mitigating the negative impact of competition on bank stability, which has mainly been under-elaborated in prior studies, particularly in using measures from The World Bank’s Worldwide Governance Indicators, which measure how the institutions of each country influence bankers’ and the people's behavior, as part of the cultural system. Research Methods: Using a sample of 427 Asian commercial banks from 2011 to 2019, we employ the generalized method of moments (GMM) estimator and consider loan growth and the cost to income ratio as instrumental variables. Findings/Results: We find robust evidence that competition erodes bank stability. Besides, better institutional quality, especially government effectiveness, regulatory quality, the rule of law, and corruption control in each country are important aspects that promote bank stability and mitigate the negative impact of competition on bank stability. Conclusion: Competition has a negative impact on bank stability. Meanwhile, the quality of institutions can both promote bank stability and mitigate this negative relationship.

This study investigates the time-varying integration of stock markets from a global and regional perspective, the consequences of two major global financial crises, i.e., the Asian Financial Crisis and the subprime mortgage, and the Crisis triggered by COVID-19. We contribute to the growing amount of literature on market integration, especially on the role of regional to global market integration. Although regional integration encourages an acceleration of global integration, the effect of a regional factor is not uniform among regions. It is important to understand regional to global market integration and the consequences during the crises. This study employs time-series data from economic territories based on the Morgan Stanley Capital International (MSCI) Asia-Pacific classification. It introduces an alternative measurement of time-varying integration by considering the correlation of regional and global markets using a simple international model, equivalent to the capital asset pricing model (CAPM). The result shows that the market integrations are time-varying both globally and regionally. The domestic markets are affected by the global market and its regional market, as the role of a regional market emerges during the financial crisis period. We find the different responses of stock markets during the Covid-19 period as a dominant factor to exacerbate the market return globally. In the long run, the upward trend for the regional market integration in both developed and emerging markets is inherent to the global market integration.DOI: 10.26905/jkdp.v25i3.5822

Herding behaviour in the financial market has been popular as a theoretical concept since the 1990s. Many articles have studied and discussed herding behaviour in the capital market, but research examining the causes or factors that trigger herding behaviour is minimal. The research themes are relatively underdeveloped because the majority of empirical research still struggles to answer the question of whether herding behaviour is found in the capital market or not. It has impeded our understanding and the development of a comprehensive theoretical framework of herding behaviour. The purpose of this paper is to conduct a bibliometric analysis and systematic literature review to provide an overview of the research findings, analyse the research profile, and guide the researcher to the most influential works and results related to herding behaviour. Based on 279 articles taken from the Scopus database, we mapped the co-occurrence of research through keywords analysis. This paper's main contribution is to build a structure of knowledge for herding behaviour in the capital market, elaborate and classify empirical research into relevant dimensions that can be used as a reference for comprehensively developing herding behaviour research. Finally, this systematic literature review's results may provide insight into future research prospects about herding behaviour.

This study employs two models of the speed of cash holdings adjustment to measure the effect of cash management on firm value, they are the deviation standard cash holding model and partial speed of adjustment model. Using sampling companies from Indonesia during 2001-2017, the study employs some techniques of regression for dynamic panel data with fixed effects, the pooled ordinary least square with fixed effects, and regression moderated analysis. Research findings show that: first, the deviation standard cash holding and partial speed of adjustment affect firm value; second, by using the deviation standard cash holding model, it shows that managerial ownership, institutional ownership, investment and debt moderate the effect of the deviation standard cash holding on firm value; third, by using the partial speed of adjustment model, it shows that investment moderates the effect of partial speed of adjustment on firm value. The implications of the study are to explain two speed of cash holding adjustment models and their impacts on the increasing trend of firm value. JEL Classification : C33, G31, G34 DOI: https://doi.org/10.26905/jkdp.v23i2.2604

Branchless banking is a banking service based on ICT, one of which is an agent. This service can be found in both urban and rural areas. This research aimsat identifying the existence and advantages of agents-based branchless banking. The locationsof branchless banking agents was also analyzed to explore the spatial pattern. This research applies a quantitative method. Agents and customers are selected by undergoing a survey. The data are obtained by structurally interviewing agents on the kinds of services they provide and the benefits of services for customers. Meanwhile, an accidental sampling technique is used to select customers. Besides, spatial analysis is applied using kernel density analysis and accessibility analysis. The result of the research shows that the advantages of branchless banking through agent alter the perception of spatial benefits to access banking services. The space for banking services is in the same place for other purposes such as business units and home. In urban areas, the making use of agents is mainly based on the factors of being closely located and easy to access. Meanwhile, in suburban and rural areas, conveniences are of primary consideration to make use of agents. Concerning the geographical field, location plays an essential role in the substantial changes related to the spatial functions ofeconomic services, mainly banking services, which are not always located in downtown areas. On the contrary, it is possible to locate economic services in rural areas, with the help of ICT-based services. The result of the analysis shows that banks do not optimally consider location, range and service area for branchless banking represented by agents.

Our study aims to examine the relation of stock return, foreign equity inflow, and investor sentiment in Indonesian Islamic stocks. We use monthly data from 2012 to 2018 and 109 firms with 9,156 total observations. Considering heterogeneity and endogeneity assumption, our models are estimated by the system generalized method of moment. Our research found a positive bi-directional effect between stock return and investor sentiment on the contemporaneous period and the uni-directional effect in which investor sentiment negatively impacts stock return. Our research also found a between stock return and foreign investor inflow. Last but not least, those imply to asset pricing, trading strategy, and portfolio management in Islamic shares.

The banking sector has experienced a far leap related to Information Communication and Technology (ICT)-based services. Among them is e-banking that has been used by the community, especially in urban areas. Likewise, the use of ATMs can be used to provide banking services to the wider community, so that it can replace most of the functions of services in banks. However, in communities outside of urban areas such as rural communities there are still limitations in accessing e-banking and ATM services. Limited use of e-banking because this service must use internet media or smart phones to access. Meanwhile, the limited use of ATMs due to the availability of ATMs in rural areas is not as much as in urban areas, considering that rural areas are areas with low settlement densities. Today, banks in Indonesia have provided branchless banking by enabling agents. Branchless banking is found in urban, suburban and rural areas. In previous research, the existence of branchless banking in the form of agents and their utilization by customers has been identified. From previous studies, maps of agent and customer density and analysis related to the condition of regional accessibility have been produced. This research is a further study focusing on sub districts area with high agent density in both rural, suburban and urban areas. The purpose of this research is to analyze the development model of agent-based branchless banking services. Data was collected through primary data through observation, structured interviews and measurement of coordinates of the location of agents and banking services in the form of ATMs and Banks. The final result is expected to be used as a model for the development of branchless banking services in Indonesia.

Purpose This paper aims to compare the effect of ownership on firm performances in the 1997 and 2008 financial crises. More specifically, it investigates the effect of cash flow rights, control rights and cash flow rights leverage on firm performance. Two conditions motivated the study. First, the 2008 financial crisis happened quickly, so it was endogenous for firms. This setting is ideal to deal with endogeneity problems in a study that involves ownership and performance. Second, during the 2000s, awareness and implementation of corporate governance increased significantly. The authors believe that the markets learn these changes and incorporate them into prices, as suggested by an efficient market hypothesis. Design/methodology/approach The paper investigates and compares the effect of ownership structure on firm performance in the 2008 subprime crisis period to that in the 1997 financial crisis. Both crises happen unexpectedly, so the authors can expect that the crises are exogenous to firms. The authors use cash flow rights, control rights and cash flow right leverage for the ownership structure dimension. They also study time-series data to investigate the effect of ownership on a firm’s value. Findings The study finds that cash flow right and cash flow right leverage did not affect stock performance during the subprime crisis of 2008. It also finds that cash flow right leverage and cash flow right affected stock performance during the financial crisis of 1997. The study attributes this finding to the learning process and improvement of corporate governance during the period of the 2000s. Using time-series data, it finds that cash flow rights positively affect firm performance, suggesting an alignment effect. Ownership concentration improves firm performance. When the study split its sample, it found that the effect ownership on firms’ value is stronger for large firms. Research limitations/implications The study’s main limitation is that it does not test directly the learning process hypothesis. The study contributes to the current literature by presenting more recent evidence on the effect of ownership structure on firm performance in a developing country. The authors argue that markets learn the improvement of corporate governance and incorporate this development into prices. Extending this research to other markets will provide confirmation whether the learning process is an international phenomenon. Practical implications The awareness and implementation of corporate governance should be maintained at least at this level. The positive relationship between ownership concentration and firm performance suggests that concentrated ownership performs monitoring more effectively. Investors should pay attention to ownership concentration. Social implications The finding that prices already reflect corporate governance may suggest that market is monitoring this issue. This seems to be a good finding. Markets can be expected to discipline companies in the implementation of corporate governance. The awareness and implementation of corporate governance should be maintained at least at the current level. Originality/value The study contributes to the current literature by presenting additional evidence on the effect of ownership (using cash flow rights, control rights and cash flow right leverage) on firms’ performance in a more recent period and in a developing country. This period is characterized by a significant increase in awareness and the implementation of good corporate governance.

Introduction/Main Objectives: This study examines the effect of institutional ownership, proxied by government and private ownership, and bank monitoring on agency conflicts. Background Problems: The previous literature focused on agency conflicts, particularly those between managers and shareholders in developed markets, with much less evidence being presented from emerging ones. Novelty: We consider the role of creditors (the banks) in mitigating agency conflicts, and the managers’ irresponsible behavior, which in previous studies has been largely under-elaborated. Research Methods: Using 1,525 observations of 305 non-financial companies that were listed in the 2011-2015 period, we employ the generalized least squares method to deal with potential econometric concern such as autocorrelation and heteroscedasticity. Finding/Results: We find that institutional ownership and bank monitoring, proxied by the number of banks and the share of their loans, are negatively related to agency conflicts. Conclusion: Banks and institutional ownership lead to lower agency conflicts. However, one should mitigate free-rider problems emanated from these relationships.

Branchless Banking is an ICT-based service provided by banks through the provision of agents. The agents are spread in several locations, both in urban and rural areas. This paper is part of a study on The Perceptions of Space and Locations of Urban and Rural Communities: Implications for the Development of Branchless Banking. However, this paper only focuses on how community makes use of branchless banking by comparing its conditions in urban and rural areas and its relations to the field of geography. The area studied in this research are Kulon Progo Regency and Yogyakarta Municipality that located in Yogyakarta Special Province, Indonesia. The method used in this research is quantitative method. The data are collected by structured interview especially to the agent and customers of branchless banking. The agents and customers of branchless banking coordinate locations used as input for spatial density analysis. The other geographic perspective is accessibility analysis using cost distance, this analysis developed from combining Euclidean distance of road and settlement, and slope. The result shows that the use of branchless banking is based on the factor of location that is closer to where they live and how easy the access is. In addition, there are also convenience factors, such as unlimited time for services and familiarity in accessing. Regarding the reasons for the utilization of Branchless Banking in Rural and Urban is almost the same, but for the city of Yogyakarta, the location factor plays a role, while in Kulon Progo the comfort factor is also a consideration. In both urban and rural areas, branchless banking agents are mostly located in residential area. Agents are highly used in the location that is far away from economic services, especially banks. It also shows the same pattern if evidenced by spatial density and accessibility analysis. The perception of societies related to the distance qualitatively has similarities with the results of spatial analysis of density and accessibility. The presence of ICT in banking services in the form branchless banking through an agent can add the concept of banking service development that is not always in the city center, but it can also be rural areas.

Basel III guidelines were released in 2010 by the Basel Committee on Banking Supervision (BCBS) as a revision of the previous Basel guidelines with the aim of strengthening the bank's capital and liquidity of banks. BCBS formulate a new policy that is the capital buffer. Capital Buffer is the difference between the minimum capital required by regulators with its overall capital and is considered a "cushion" against the shocks of the financial crisis. This study examine the impact of risk, business cycle, and competition on banks’ capital buffer. This paper used the sample of Islamic banks and conventional banks in ASEAN and MENA in the period 2011-2015 with unbalanced panel data. Using System GMM method to test the characteristics of Islamic banks in managing its capital. The finding indicates that the degree of capital buffer in islamic banks tend to adjust its risk. The result also shows that capital buffer decrease during economic expansion where banks act aggressively by extending their lending activities. The relationship between capital buffer and competition is positive in that the high level of competition to motivate banks to have higher capital.

This study investigates the influence of background diversity of bank board members on performance and risk. Using data from Indonesian banks from 2001 to 2011 covering 4200 individual year observations and 21 ethnic groups, we estimate the degree of diversity by considering various aspects (gender, citizenship, age, experience, tenure, ethnicity, nationality, education level and type) and find significant impacts on bank performance. On the whole, diversity is in general positively associated with performance except when it relates to ethnicity. It not only reduces performance per se but also increases risk. Female presence and professional diversity reduce risk but nationality and ethnicity diversities are associated with higher risk. Education diversity generally leads to higher income volatility and leverage risk. Our results are generally robust to various alternative performance measures, including risk adjusted returns, and estimation methods.

Economical services are found more in urban areas than those in villages. The same case is the ones related to banking services. The development of information and communication technology has made more sophisticated banking services. This can be proven with the existence of branchless banking in the form of e-banking, mobile banking, and ATM. New branchless banking services have been recently mushrooming in the form of agents that appear simpler. It is easy for villagers to access them since they are not well facilitated with e-banking, mobile banking, and ATM. This research is aimed at giving descriptions on the provision of services by agents and their use in villages and that it can be found out how far the transition of urban services in villages has taken place. The data are obtained by conducting a structured interview, doing observation, and identifying the existence of banking services. In fact, the result shows that the provision of banking services has been partly replaced by the existence of agents. The agents have attracted more and more villagers to make use of banking services. Therefore, it can be said that the development of information and communication technology has enabled the transition of urban services to take place in villages in the implementation of branchless banking services through agents.

This study investigates the influence of background diversity of bank board members on performance and risk. Using data from Indonesian banks from 2001 to 2011 covering 4200 individual year observations and 21 ethnic groups, we estimate the degree of diversity by considering various aspects (gender, citizenship, age, experience, tenure, ethnicity, nationality, education level and type) and find significant impacts on bank performance. On the whole, diversity is in general positively associated with performance except when it relates to ethnicity. It not only reduces performance per se but also increases risk. Female presence and professional diversity reduce risk but nationality and ethnicity diversities are associated with higher risk. Education diversity generally leads to higher income volatility and leverage risk. Our results are generally robust to various alternative performance measures, including risk adjusted returns, and estimation methods.

This study aims to investigate whether the presence of institutional investors in family-controlled banks impacts their performance and risk. Using detailed data on Indonesian banks from 2001 to 2008 and controlling for various factors, our results first show that family-controlled banks are less profitable and more risky than other banks. Specifically, family presence, either under the form of direct ownership, pure single majority, or family directors, is related to higher default risk, income variability, and loan risk. However, the presence of institutional investors as a second stage block holder in family controlled banks tends to mitigate and even reverse such behavior by reducing risk-taking and improving performance. Our results are generally robust with regard to endogeneity issues and alternative specifications.