This paper investigates the dynamic relationship between capital inflows and bank lending in Indonesia. We use a Structural Vector AutoRegression (SVAR) model that allows exogenous international commodity prices and global financial market fluctuations to influence capital inflows. We find that commodity price shocks are more important as compared to global financial shocks in explaining the variance of capital inflows in the long run. Furthermore, shocks from capital inflows lead to a change in bank lending allocation across economic sectors.
|Number of pages||42|
|Journal||Buletin Ekonomi Moneter dan Perbankan|
|Publication status||Published - 2021|
- Bank lending
- Capital inflows
- Commodity price shocks
- Financial stability