This study aims to analyze the effect of bank ownership structure on loan growth before and during the pandemic. Specifically, we developed four models to capture different loan types provided in the Indonesian banking system; working capital, investment, consumer, and total loan growth. This study used 150 observations of commercial banks for 2019 (before the pandemic) and 2020 (during the pandemic). We conducted the regression method to test hypotheses. The main finding of this study was that foreign banks’ consumer credit growth significantly lower than domestic banks. Similar findings occurred for other types of loans, and this conclusion has controlled for the adverse effects of the pandemic. This finding means that foreign banks in Indonesia are not substitutes for loan suppliers in the domestic market and tend to behave pro-cyclical. The government needs to carry out regulations to reduce the risk-accelerate nature of foreign banks in the Indonesian economy


Agoraki, M.-E. K., & Kouretas, G. P. (2021). Loan growth, ownership, and regulation in the European Banking Sector: Old versus new banking landscape. Journal of International Financial Markets, Institutions and Money, 75, 101450. https://doi. org/10.1016/j.intfin.2021.101450

Agusman, A., Cullen, G. S., Gasbarro, D., Monroe, G. S., & Zumwalt, J. K. (2014). Government intervention, bank ownership and risk-taking during the Indonesian financial crisis. Pacific-Basin Finance Journal, 30, 114–131. https://doi.org/10.1016/j.pacfin. 2014.07.003

Ahmad, N. F. G., Zamil, N. A. M., Basiruddin, R., & Saruchi, A. (2019). Ownership Structure, Bank Capital and Bank Lending/ Financing Behaviour in a Dual Banking System. International Journal of Engineering and Advanced Technology, 8(5C), 233–237. https://doi.org/10.35940/ijeat. E1034.0585C19

Albertazzi, U., & Bottero, M. (2014). Foreign bank lending: Evidence from the global financial crisis. Journal of International Economics, 92, S22–S35. https://doi. org/10.1016/j.jinteco.2014.01.002

Atahau, A. D. R., & Cronje, T. (2020). Bank lending: The bank ownership focus in the pre-and post-global financial crisis periods. Economic Systems, 44(4), 100813. https:// doi.org/10.1016/j.ecosys.2020.100813

Bernanke, B. S., & Gertler, M. (1995). Inside the Black Box: The Credit Channel of Monetary Policy Transmission. Journal of Economic Perspectives, 9(4), 27–48.

Bonin, J. P., & Louie, D. (2017). Did foreign banks stay committed to emerging Europe during recent financial crises? Journal of Comparative Economics, 45(4), 793–808. https://doi.org/10.1016/j.jce.2016.08.003

Bouzgarrou, H., Jouida, S., & Louhichi, W. (2018). Bank profitability during and before the financial crisis: Domestic versus foreign banks. Research in International Business and Finance, 44, 26–39. https://doi. org/10.1016/j.ribaf.2017.05.011

Cao, Y., Gregory-Smith, I., & Montagnoli, A. (2018). Transmission of liquidity shocks: Evidence on cross-border bank ownership linkages. Journal of International Financial Markets, Institutions and Money, 53, 158–178. https://doi.org/10.1016/j.intfin. 2017.09.017

Clarke, R. G., Cull, R., Maria, M. S. M., & Sanchez, S. M. (2003). Foreign Bank Entry: Experience, Implications for Developing Economies, and Agenda for Further Research. The World Bank Research Observer, 18(1), 25–59. https://doi.org/10.1093/wbro/lkg002

Degryse, H., Havrylchyk, O., Jurzyk, E., & Kozak, S. (2012). Foreign bank entry, credit allocation and lending rates in emerging markets: Empirical evidence from Poland. Journal of Banking & Finance, 36(11), 2949–2959. https://doi.org/10.1016/j.jbankfin. 2011.12.006

Demirgüç-Kunt, A., Pedraza, A., & Ruiz-Ortega, C. (2021). Banking sector performance during the COVID-19 crisis. Journal of Banking & Finance, 133, 106305. https:// doi.org/10.1016/j.jbankfin.2021.106305

Dungey, M., & Gajurel, D. (2015). Contagion and banking crisis – International evidence for 2007–2009. Journal of Banking & Finance, 60, 271–283. https://doi. org/10.1016/j.jbankfin.2015.08.007

Haas, R. D., Ferreira, D., & Taci, A. (2010). What determines the composition of banks’ loan portfolios? Evidence from transition countries.

Hadad, M. D., Agusman, A., Monroe, G. S., Gasbarro, D., & Zumwalt, J. K. (2011). Market discipline, financial crisis and regulatory changes: Evidence from Indonesian banks. Journal of Banking & Finance, 35(6), 1552–1562. https://doi.org/10.1016/j.jbankfin. 2010.11.003

Hoffmann, M., Maslov, E., & Sørensen, B. E. (2022). Small firms and domestic bank dependence in Europe’s great recession. Journal of International Economics, 137, 103623. https://doi.org/10.1016/j.jinteco. 2022.103623

Hsieh, M.-F., & Lee, C.-C. (2020). Foreign bank lending during a crisis: The impact of financial regulations. Economic Systems, 44(3), 100791. https://doi.org/10.1016/j. ecosys.2020.100791

Kim, D., & Sohn, W. (2017). The effect of bank capital on lending: Does liquidity matter? Journal of Banking & Finance, 77, 95–107. https://doi.org/10.1016/j.jbankfin. 2017.01.011

Kowalewski, O. (2019). Does Foreign Bank Branch Activity Affect Lending Behavior? SSRN Electronic Journal. https://doi. org/10.2139/ssrn.3346685

Mulyaningsih, T., Daly, A., & Miranti, R. (2015). Foreign participation and banking competition: Evidence from the Indonesian banking industry. Journal of Financial Stability, 19, 70–82. https://doi.org/10.1016/j. jfs.2015.02.001

Nguyen, H. D. H., & Dang, V. D. (2020). Bank- Specific Determinants of Loan Growth in Vietnam: Evidence from the CAMELS Approach. The Journal of Asian Finance, Economics and Business, 7(9), 179–189. https:// doi.org/10.13106/JAFEB.2020.VOL7. NO9.179

Peek, J., & Rosengren, E. (1995). Bank regulation and the credit crunch. Journal of Banking & Finance, 19(3–4), 679–692. https:// doi.org/10.1016/0378-4266(94)00148-V

Sogani, A. (2020). The Great Lockdown vs. The Great Depression and the 2008 Global Financial Crisis. International Relations, Https://Www.e-Ir.Info/2020/07/02/the- Great-Lockdown-vs-the-Great-Depressionand- the-2008-Global-Financial-Crisis/, accessed Dec122022.

Syahid, W., & Dalimunthe, Z. (2017). On the Existence of Relationship Lending in Islamic Microfinancing: 1st International Conference on Islamic Economics, Business, and Philanthropy, 751–755. https://doi. org/10.5220/0007089207510755

Syihab, H., & Dalimunthe, Z. (2022). Why Did Borrowers Apply For Debt Restructuring During The COVID-19 Pandemic?: 3rd International Conference on Business and Management of Technology (ICONBMT 2021), Surabaya, Indonesia. https://doi. org/10.2991/aebmr.k.211226.021

Tabak, B. M., Silva, I. B. D. R. e, & Silva, T. C. (2022). Analysis of connectivity between the world’s banking markets: The COVID- 19 global pandemic shock. The Quarterly Review of Economics and Finance, 84, 324–336. https://doi.org/10.1016/j. qref.2022.03.002

Vithessonthi, C. (2023). The consequences of bank loan growth: Evidence from Asia. International Review of Economics & Finance, 83, 252–270. https://doi.org/10.1016/j. iref.2022.08.025

Weill, L. (2003). The role of foreign ownership. Economics of Transition, 11(3), 569–592.

Wu, J., Chen, M., Jeon, B. N., & Wang, R. (2017). Does foreign bank penetration affect the risk of domestic banks? Evidence from emerging economies. Journal of Financial Stability, 31, 45–61. https://doi. org/10.1016/j.jfs.2017.06.004

Wu, S.-W., Nguyen, M.-T., & Nguyen, P.-H. (2022). Does loan growth impact on bank risk? Heliyon, 8(8), e10319. https://doi. org/10.1016/j.heliyon.2022.e10319

Yildirim, C., Kasman, A., & Hamid, F. S. (2021). Impact of foreign ownership on market power: Do regional banks behave differently in ASEAN countries? Economic Modelling, 105, 105654. https://doi.org/10.1016/j.econmod. 2021.105654



To view the content in your browser, please download Adobe Reader or, alternately,
you may Download the file to your hard drive.

NOTE: The latest versions of Adobe Reader do not support viewing PDF files within Firefox on Mac OS and if you are using a modern (Intel) Mac, there is no official plugin for viewing PDF files within the browser window.