Analysis of Corporate Governance, Market Concentration, And Diversification on Financial Stability In The Indonesian Banking Sector

DOI

10.2991/978-94-6463-585-0_20How to use a DOI?

Keywords

Corporate Governance; Market Concentration; Diversification; Financial Stability; COVID-19

Abstract

This research explores the relationships between corporate governance, market concentration, and diversification strategies in shaping financial stability within Indonesia’s banking sector, with a particular focus on the impact of the COVID-19 pandemic. Utilizing COVID-19 as a dummy variable, the study analyzes data from 2015 to 2022 across 62 Indonesian listed and non-listed commercial banks. A panel data regression model, with the Z score as the measure of financial stability, was employed to assess the effects of corporate governance metrics (such as independent commissioner participation, gender diversity, ownership concentration, and managerial ownership), market concentration, and diversification. Findings suggest that while independent commissioner participation, gender diversity, and ownership concentration demonstrate negative and insignificant effects on financial stability, managerial ownership and market concentration exhibit significant negative impacts. Conversely, diversification into non-traditional activities shows a positive and significant correlation with stability. Recommendations include enhancing the role of independent commissioners, promoting gender diversity, diversifying ownership, and encouraging market competition. Regulators should enforce governance policies, monitor ownership concentration, and promote income diversification.

Copyright

© 2024 The Author(s)

Open Access

Open Access This chapter is licensed under the terms of the Creative Commons Attribution-NonCommercial 4.0 International License (http://creativecommons.org/licenses/by-nc/4.0/), which permits any noncommercial use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made.

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TY  - CONF
AU  - Robert Ezekiel Lee
AU  - Yosman Bustaman
PY  - 2024
DA  - 2024/12/11
TI  - Analysis of Corporate Governance, Market Concentration, And Diversification on Financial Stability In The Indonesian Banking Sector
BT  - Proceedings of the 5th International Conference on Global Innovation and Trends in Economy 2024 (INCOGITE 2024)
PB  - Atlantis Press
SP  - 276
EP  - 292
SN  - 2352-5428
UR  - https://doi.org/10.2991/978-94-6463-585-0_20
DO  - 10.2991/978-94-6463-585-0_20
ID  - Lee2024
ER  -