Abstract

This paper examines the structure of the financial system in Indonesia and considers its past and prospective contribution to the country’s economic performance. The focus is on the banking system and securities markets, which are the primary mechanisms for mobilizing savings and allocating investment funds. It also examines the performance of the financial system through the analytical lens of its contribution to growth, stability, and efficiency, using where possible the theory of financial markets. It considers a wide variety of data, although the unavailability of sufficiently detailed, published material for the most part precludes formal econometric tests.