Work

The Impact of Government Bond Issuance on Banking Activities and Economic Growth in Indonesia

Year: 2024

Type: article

Abstract: This paper aims to test the effect of crowding out on one of the developing countries, namely Indonesia. Using monthly data from January 2008 to June 2023, VECM's estimates show that the growth of government debt through its securities is negatively and significantly related to the growth of banking loans, both in the short and long term. This shows that there has been a crowding out effect in the process of withdrawing government debt. Meanwhile, the results of the Markov-switching estimate show that credit growth has a positive and significant impact on economic growth, both in normal and turbulent conditions. The growth of government debt is only positive and significant in turbulence periods, but not significant in normal times. These findings show that the government's debt policy has been at risk to the banking system and the economy.

Source: PaperAsia

DOI: 10.59953/paperasia.v40i6b.304

Authors: Wartoyo Wartoyo, Layaman Layaman, Dewi Fatmasari, Abdul Aziz, Nining Wahyuningsih, Nur Haida

Institutions: IAIN Syekh Nurjati Cirebon, Universitas Islam Negeri Siber Syekh Nurjati Cirebon, Universitas Islam Bunga Bangsa Cirebon

Language: English

Topic: Monetary Policy and Economic Impact

Subfield: General Economics, Econometrics and Finance

Field: Economics, Econometrics and Finance

Domain: Social Sciences

SDG: Decent work and economic growth

Open Access status: diamond

OpenAlex ID: W4405231610

FWCI: 2.032

Cites: 3

Cited by: 3

Related to: 10