TOUGHNESS OF INDONESIAN BANKING SECTOR FACING GLOBAL FINANCIAL CRISIS 2008: TESTS ON WELFARE OF SHAREHOLDERS

Download This Article

Abstract

This study aims to investigate the impact of the global crisis on the financial performance of banks in Indonesia. The study will also look at the impact of the crisis on the welfare of stakeholders in the form of dividend payments to shareholders. The initial assumption that we have built for this condition and for the explanation in the previous paragraph is that there is a difference between the payment of dividends to shareholders before and after the period of the global crisis. Proof of this assumption is also at the same time can give an answer to the resilience of the Indonesian economy during the global crisis. By using all populations banking companies listed in Indonesia Stock Exchange, this study compared the financial performance of the company before and after the next global crisis with its impact on the payment of dividends. This study shows that there is a significant decline in its net profit after the global crisis. But there is not enough result to support second hypotheses about decrease of share prices as an excessive market sentiment surrounding global crises. It looks at the stock price actually rose after the global crisis. Other conditions have been found in this study is that there is an increase dividends given to shareholders after the crisis. These findings shows that the banking sector in Indonesia has a fairly strong resilience in the face of the global crisis in 2008. This condition may occur due to the success of fiscal regulation of Indonesia Bank to save Indonesian economy.

Keywords: Global Financial Crisis, Stock Price, Net Income, Welfare of Shareholders

How to cite this paper: Lindrianasari, & Zubaidi Indra, A. (2014). Toughness of Indonesian banking sector facing global financial crisis 2008: Tests on welfare of shareholders. Corporate Ownership & Control, 11(4), 131-140. https://doi.org/10.22495/cocv11i4p9