The impact of monetary policy and bank competition on banking industry risk: A default analysis

In the financial system and economy, banking industry plays a crucial role. Default risk takes central stage in preserving stability needs to be mitigated as it can trigger crisis. The study examines combined effects of monetary policy bank competition on defaults. Using sample 95 commercial banks Indonesia between 2009 2019, this employs Generalized Method Moments, two-step dynamic panel-data estimation system, analyze it. Empirical results show that policy, through an increase benchmark interest rate, negatively affects probability default. extent is also enhanced by policy. Banking has negative significant effect default positive distance Furthermore, impact positively but Building study, promote stable more efficient policymakers should develop policies foster complementary policies.