An empirical analysis of credit migration in Indonesian banking

Dar, Humayon A.; Hall, Maximilian J. B.; Muljawan, Dadang
December 2003
Journal of International Banking Regulation;Dec2003, Vol. 5 Issue 2, p147
Academic Journal
This paper analyses the process of credit migration in an Islamic commercial bank operating in Indonesia. In particular, the relevance of industrial performance to the dynamics of loan status in the selected bank is explored. From the statistical results, two interesting phenomena are revealed. First, industrial performance is statistically significant in affecting the credit migration process and, secondly, there is irreversibility in the credit migration process. This analysis can be used to provide additional information to Indonesian banks, as well as their supervisors, to help improve the accuracy of the risk assessment process, and the efficiency of external oversight respectively.


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