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Indonesia: Financial Sector Assessment Program-Technical Note on Stress Testing and Systemic Risk Analysis
Author:
International Monetary Fund. Monetary and Capital Markets Department
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Series:
IMF Staff Country Reports
Volume/Issue:
Volume 2025: Issue 053
Language:
English
Publication Date:
26 Feb 2025
DOI:
https://doi.org/10.5089/9798229002332.002
ISBN:
9798229002332
ISSN:
1934-7685
Pages:
97
Keywords:
banking sector characteristic; coverage ratio; interconnectedness ANALYSIS; capital markets department; bank credit risk; liquidity sensitivity analysis; FX LIQUIDITY ANALYSIS; Stress testing; Commercial banks; Liquidity; Loans; Securities; Global
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This Technical Note explores Stress Testing and Systemic Risk Analysis for the Indonesia Financial Sector Assessment Program. The financial system is relatively small and dominated by banks with high capital and liquidity buffers. The team undertook a thorough top-down corporate and bank solvency, bank liquidity stress tests as well as analysis of interconnectedness using mid-2023 data. This note covers the methodology and results of the scenario-based solvency test, the single factor sensitivity analysis, the liquidity test, and interconnectedness analysis. The results of the bank solvency stress test suggest that the banking sector is resilient to multiple macroeconomic shocks, although there are tail risks for small banks. The overall liquidity position of banks is sound, but foreign exchange liquidity risks need to be closely monitored, and Liquidity Coverage Ratios should be made mandatory for all banks. The interconnectedness analysis points to limited interbank exposure, although cross-border analysis is hindered by data availability.
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Cover IMF Staff Country Reports
IMF Staff Country Reports
ISSN:
1934-7685
Publisher:
International Monetary Fund