Principal-Agent or Patron-Client? The Unspoken Concord of Indonesia’s Two-Tier Corporate Governance

Novita Ikasari, Umanto, Ika Sri Hartantiningsih

Research output: Chapter in Book/Report/Conference proceedingConference contributionpeer-review


Corporate governance (CG) in the banking sector is deemed as one of the most structured and regulated. When it applies to regional development banks, the regional dynamics contribute to the quality of corporate governance. Using Indonesia as a case in point, this paper aims at analyzing corporate governance practices based on dynamics amongst actors in regional development banks. Using agency and patron-client theory, the underlying dynamics amongst different actors representing the two-tier system applied by Indonesia are presented and elaborated. The study applies a qualitative approach. Data are collected using in-depth interviews with representatives from the board of directors and board of commissioners of selected regional development banks as well as regulatory agencies in Indonesia. This study proposes the application of the patron-client approach to understand the interactions amongst controlling shareholders, the board of commissioners, and the board of directors. In conclusion, a model of dynamic interactions amongst the actors is proposed based on two case studies constructed from a series of interviews to elaborate the dynamics.

Original languageEnglish
Title of host publicationSustainable Finance, Digitalization and the Role of Technology - Proceedings of The International Conference on Business and Technology, ICBT 2021
EditorsBahaaeddin Alareeni, Allam Hamdan
PublisherSpringer Science and Business Media Deutschland GmbH
Number of pages13
ISBN (Print)9783031080838
Publication statusPublished - 2023
EventInternational Conference on Business and Technology, ICBT 2021 - Istanbul, Turkey
Duration: 6 Nov 20217 Nov 2021

Publication series

NameLecture Notes in Networks and Systems
ISSN (Print)2367-3370
ISSN (Electronic)2367-3389


ConferenceInternational Conference on Business and Technology, ICBT 2021


  • Corporate governance
  • Patron-client
  • Regional development banks


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