The Effects Of Financial System Stability Indicators On Financial Institutions

Abstract

Indonesia has increasingly developed in the past few years, both in the bank and non-bank industries. The non-bank financial industry is an essential financing source in any country. The number of development programs in Indonesia requires tons of money. Alternative financing that can be employed is the financing obtained from the Financial Institutions However, the crisis monitoring and prevention framework do not yet cover the Non-Bank Financial Industry. Therefore, this study aims to determine the effect of financial system stability on the financial institutions in the long-term and short-term utilizing index calculation analysis usingthe min-max method and Error Correction Model or ECM Error Correction Model.In addition, the study employs thesecondary data with monthly time series from January 2015 to April 2020. This study examines whetherfinancial system stability significantly affects Indonesia's financial institutions in the longterm.