• Iskandar Simorangkir


There are two main competing theories to explain bank runs. One argues that panics come primarily from lack of confidence on banking sector, originated for example, in the bankruptcy of a big bank. According to this argument, lack of confidence and asymmetric information problems from depositors would induce contagious or self-fulfiling prophecy of bank runs. The other argues that banking crises are part of a cycle that effects both the financial and real sector of the economy. In other words, bank runs is determined by bank fundamentals and economic fundamentals.

Using monthly panel data information on Indonesian banks this paper attemps to explain bank runs during the 1997/1998 financial crises. This papaer uses the variation of deposits as proxy for bank runs and the variables related to solvency theory and general economic condition as explanatory variables for bank fundamentals and economic fundamentals, respectively. To catch the contagion or self-fulfiling prophecy determinant of bank runs, I use dynamic panel data by imposing lag of deposit variations. The results shows that the impetus of bank runs during the crisis of 1997/1998 were the combination of contagion and bank fundamentals. However, economic fundamentals did not exert significant impact on bank runs. The finding suggest that the role of financial safety net, such as deposit insurance would be very important to keep depositors’ trust on Indonesian banking system, rather than preventing bank runs in the future.

Keywords: Markow, bank runs, dynamic panel, Indonesia

JEL Classification: C33, E58, G21


Download data is not yet available.


Ahorany, Josep, and Itzhak Swary. “Contagion Effects on Bank Failurs: Evidence from Capital Markets.” The Journal of Business, July 1983, 56(3), pp 305-322

Allen, Franklin and Douglas Gale. “Financial Contagion”. The Journal of Political Economy, February 2000, 108(1), pp. 1-33

Allen, Franklin and Douglas Gale. “Optimal Financial Crises” The Journal of Finance, Vol. 53, No. 4 Papers and Proceedings of the Fifth-Eighth Annual Meeting of the American Finance Association, Chicago, Illinois, January 3-5, 1998 (Aug., 1998), pp. 1245-1284

Arellano, Manuel, and Stephen Bond. “Some Test of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations” The Review of Economic Studies, Vol. 58, No. 2 (Apr., 1991), pp. 277-297

Baltagi, Badi H. “Econometrics Analysis of Panel Data”. John Wiley & Sons Ltd, 2001

Bank Indonesia, Laporan tahunan 1997/1998 dan 1998/1999

Bhattacharya, Sudipto and Anjan V. Thakor, “Contemporary Banking Theory”. Journal of Financial Intermediation, October 1993, 3(1), pp. 2-50

Bhattacharya, Sudipto. “Aspects of Monetary and Banking Theory and Moral Hazard” The Journal of Finance, Vol. 37, No. 2, Papers and Proceedings of the Fortieth Annual Meeting of the American Finance Assocation, Washington, D.C., December 28-30, 1981 (May, 1982), pp. 371-384

Bhattacharya, Sudipto. “Dynamic Banking: A Reconsideration” The Review of Financial Studies, Vol. 9, No. 3 (Autumn, 1996), pp. 1003-1032

Bryant, John. “Bank Collapse and Depression” Journal of Money, Credit and Banking, Vol. 13, No. 4 (Nov., 1981), pp 454-464

Calomiris, Charles W, and Larry Shweikart. “The Panic of 1857: Origins, Transmission and Containment” The Journal of Economic History, Vol. 51, No 4 (Dec., 1991), pp. 807-834

Calomiris, Charles W. And Joseph R. Mason, “Contagion and Bank Failure During the Great Depression: The Jnue 1932 Chicago Banking Panic”. The American Economic Review. December 1997, 87(5), pp. 863-883

Cerra, Valerie, and Sweta Chaman Saxena. 2000. “Contagion, Monsoons, and Domestic Turmoil in Indonesia: A Case Study in the Asian Currency Crisis” IMF Working Paper, WP/00/60

Chen, Yehning. “Banking Panics: The Role of the First-Come, First Served Rule and Information Externalities”. The Journal of Political Economy, October 1999, 107(5), pp. 946-968

Diamond, Douglas W. “Debt Maturity Structure and Liquidity Risk.” The Quarterly Journal of Economics, August 1991, 106(3), pp. 709-737.

Diamond, Douglas W. And Philip H. Dybvig, “Bank Runs, Deposit Insurance, and Liquidity.” Journal of Political Economy, June 1983, 91(3), pp. 401-19

Donalson, R. Glen. “Sources of Panics: Evidence from the Weekly Data”. Journal of Monetary Economics, November 1992, 30(2), pp. 277-305

_______, “Financing Banking Crises: Lessons from Panic of 1907”. Journal of Monetart Economics, February 1993, 31(1), pp. 69-95

Dow, Sheila C. “Why the Banking System should be Regulated” The Economic Journal, Vol. 106, No 436 (May, 1996), pp. 698-707

Druska, Viliam dan William C. Horrace. “Generalize Moments Estimation For Spatial Panel Data” Technical Working Papers 291, National Bureau of Economic Research, 2003

Engle Robert F. Dan C.W.J Granger. “Co-Integration and Error Correction: Representation, Estimation, and Testing”. Economitrica, Vol. 55, No. 2 (Mar., 1987), pp 251-276.

Feltenstein, Andrew. 2000. “Bank Failures and Fiscal Austerity: Policy Prescriptions for a Developing Country” IMF Working Paper, WP/00/90

Forbes, Kristin, and Roberto Rigobon. September 2000. “Contagion in Latin America: Definitions, Measurement, and Policy Implications” NBER Working Paper, Working Paper 7885

Freixas, Xavier, Bruno M. Parigi, dan Jean-Charles Rochet. “Systemic Risk, Interbank Relations, and Liquidity Provision by the Central Bank” Journal of Money, Credit, and Banking, Vol. 32, No. 3 Part 2:What Should Central Banks Do? (Aug., 2000), pp. 611-638.

Freixas, Xavier dan Jean-Charles Rochet. “Microeconomics of Banking”. The MIT Press, 2002

Garcia-Herroro, Alicia. October 1997. “Banking Crises in Latin America in the 1990s: Lessons from Argentina, Paraguay, and Venezuela” IMF Working Paper, WP/97/140

Goldstein, Morris, and Philip Turner. “Banking Crises in Emerging Economies: Origins and Policy Options” Bank for International Settlements Economic Papers, No. 46 – October 1996

Gujarati, Damoda N. “Basic Econometrics”, Fourth Edition, The Mc Graw Hill, 2003

Hasan , Iftekhar, and Gerald P. Dwyer, Jr. “Bank Runs in the Free Banking Period” Journal of Money, Credit and Banking, Vol. 26, No. 2 (May, 1994), pp. 271-288

Hayashi, Fumio. “Econometrics”. Priceton University Press, 2000

Hsiao, Cheng. “Analysis of Panel Data”. Ecoonometric Society Monographs, Cambride University Press, 1986

________. “Cointegration and Dynamic Simultaneous Equation Model”. Econometrica, Vol. 65, No. 3 (May, 1997), 647-670

Ho, Thomas, and Anthony Saunders. “A Catastrophe Model of Bank Failure” The Journal of Finance, Volume 35, Issue 5 (Dec. 1980), pp. 1189-1207

Hubbard, R. Glenn. “Money, the Financial System and the Economy”. Fourth Edition, Addison Wesley, 2002

Johnston, R. Barry, Jingqing Chai, and Liliana Schumacher. 2000. “Assessing Financial System Vulnerabilities” IMF Working Paper, WP/00/76

Kaminsky, Graciela L, and Carmen M. Reinhart. “Financial Crises in Asia and Latin America: Then and Now” The American Economic Reviwe, Vol. 88, No. 2, Papers and Proceedings of the Hundred and Tenth Annual Meeting of the American Economic Association (May, 1998), pp. 444-448

Kaminsky, Graciela L. “The Twin Crisis: The Causes of Banking and Balance-Of-Payments Problems” The American Economic Review, Vol 89, No. 3(Jun., 1999), pp. 473-500

Kaminsky, Graciela L. December 1999. “Currency and Banking Crises: The Early Warnings of Distress” IMF Working Paper, WP/99/178

Kang, Jun-Koo, and Rene M. Stulz. “Do Banking Affect Borrowing Firm Performance? An Analysis of Japanese Experience”. The Journal of Business, January 2000, 73(1), pp. 1-23

Kelly, Morgan, and Cormac O Grada. “Market Contagion: Evidence from the Panics of 1854 and 1857” The American Review, Vol. 90, No. 5 (Dec., 2000), pp. 1110-1124

Latter, Tony. 1997. “The Causes and Management of Banking Crises” Handbooks in Central Banking, Centre for Banking Studies, Bank of England

Lee, Myoung-jae. “Panel Data Econometrics: Methods-of-Moments and Limited Dependent Variables”. Academic Press, 2002

Lux, Thomas. “Herd Behaviour, Bubbles and Crashes”. The Economic Journal, July 1995, 431, pp.881-896

Mayer, Thomas. “Should Large Banks be Allowed to Fail?” The Journal of Financial and Quantitative Analysis, Vol. 10, No. 4, 1975 Proceedings (Nov., 1975), pp. 603-610

Morris, Stephen, and Hyung Song Shin. “Unique Equlibrium in a Model of Self-Fulfiling Currency Attacks” The American Economic Review, Vol. 88, No. 3 (Jun., 1998), pp. 587-597

Musumeci, James J. and Joseph F. Sinkey Jr. “The International Debt Crisis, Investor Contagion, and Bank Security in 1987: The Brazilian Experience”. Journal of Money, Credit and Banking, May 1990, 22(2), pp. 209-220

Nagayasu, Jun. “Currency Crisis and Contagion: Evidence from Exchange Rates and Sectoral Stock Indices of the Philippines and Thailand” IMF Working Paper, WP/00/39

Peck, James, and Karl Shell. “Equilibrium Bank Runs” Journal of Political Economy, 2003, vol. 111, No. 1. The University of Chicago.

Peck, James, and Karl Shell. “Bank Portfolio Restrictions and Equilibrium Bank Runs” Journal of Economic Literature, July 29, 1999. Classification Numbers: D82, G21, E42.

Rigibon, Roberto. “On the Measurment of the International Propagation of Shocks: is the Transmission Stable?” Journal of International Economics. 1 October 2002. Elseier B.V.

Rochet, Jean-Charles, and Jean Tirole. “Interbank Lending and Systemic Risk”. Journal of Money, Credit and Banking, November 1996, 28(4), pp. 733-762

Rochet, Jean-Charles, and Jean Tirole. Interbank Lending and Systemic Risk”. Journal of Money, Credit and Banking, Vol. 28, No. 4, Part 2: Payment Systems Research and Public Policy Risk, Efficiency and Innovation (Nov., 1996), 733-762

Safuan, Sugiharso. “Contagion and Interdependence in the Asian Crisis” Jakarta, 27 Agustus 2003. Pusat Pendidikan dan Studi Kebanksentralan, Bank Indonesia

Schotter, Andrew, and Tanju Yorulmazer. “On the Severity of Bank Runs: An Experimental Study” Working Paper, New York University. February 23, 2003

Shiller, Robert J. “Comovements in Stock Prices and Comovements in Dividends”. The Journal of Finance, Vol. 44, No. 3 (Jul 1989), pp. 719-729

Summers, Lawrence H. “International Financial Crises: Causes, Prevention, and Cures” The American Economic Review, Vol. 90, No. 2, Papers and Proceedings of the One Hundred Twelfth Annual Meeting of the American Economic Association (May, 2000), pp. 1-16

Warjiyo, Perry. “Bank Failure Management: The Case of Indonesia” APEC Policy Dialogue on Bank Failure Management Paper, Mexico, June 7-8, 2001

Wigmore, Barry A. “Was the Bank Holiday of 1933 Caused by a Run on the Dollar?” Journal of Economic History, September 1987, 47(3), pp. 739-56

Wooldridge, Jeffrey M. “Econometric Analysis of Cross Section and Panel Data”. The MIT Press, 2002.
How to Cite
Simorangkir, I. (2007). DETERMINAN BANK RUNS PADA KRISIS PERBANKAN 1997/1998: SUATU KAJIAN DENGAN MENGGUNAKAN PANEL DATA DINAMIS. Buletin Ekonomi Moneter Dan Perbankan, 9(2), 99 -.