Corruption and Government Intervention on Bank Risk-Taking: Cases of Asian Countries

Rizky Maulana Nurhidayat; Rofikoh Rokhim

doi:10.15294/jdm.v9i2.15951

Corruption and Government Intervention on Bank Risk-Taking: Cases of Asian Countries

Rizky Maulana Nurhidayat⁽¹⁾, Rofikoh Rokhim⁽²⁾,

DOI: https://doi.org/10.15294/jdm.v9i2.15951

(1) Universitas Indonesia
(2) Universitas Indonesia

Abstract

This paper aims to addresses the impact of corruption, anti-corruption commission, and government intervention on bankâ€™s risk-taking using banks in Asian Countries such asÂ Indonesia, Malaysia, Thailand, and South of Korea during the period 1995-2016. This paper uses corruption variable, bank-specific variables, macroeconomic variables, dummy variables and interaction variable to estimate bankâ€™s risk-taking variable. Using data from 76 banks in Indonesia, Malaysia, Thailand and South Korea over 21 years, this research finds consistent evidence that higher level of corruption and government intervention in crisis-situation will increase the risk-taking behaviour of banks. In the other hand, bank risk-taking behaviour minimized by the existence of anti-corruption commission. In addition, this paper also finds that government intervention amplifies corruptionâ€™s effect on bankâ€™s risk-taking behaviour because of strong signs of moral hazard and weaknesses in the governance and supervision.

Keywords

Bank Risk-taking; Corruption; Govenrment Intervention.

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