Systemic risk, bank’s capital buffer, and leverage

Research output: Contribution to journalArticlepeer-review


Thispapermeasures individual bank’s impact on banking systemic risk and examinesthe effect of individual bank’s capital buffer and leverageto bank’ssystemic risk im-pact in Indonesia during 2010-2014. Using Merton’s distance-to-default to measuresystemic risk, the study shows a significant negative relationship between bank’s capi-tal buffer and systemic risk. High capital buffer tends to lowering bank’s impact onsystemic risk. Bank’s leverage level also influences its contribution to systemic risk,eventhough the impact is much lower compared to that of capital buffer impact.
Original languageEnglish
Pages (from-to)150-158
JournalEconomic Journal of Emerging Markets
Issue number2
Publication statusPublished - 1 Oct 2017


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