Does Macroprudential Instruments and Market Power Matter on Banks' Performance : (An Emperical Evidence on Indonesian Banking Firms)

The research question of this dissertation is divided into 3 folds: firstly, whether the market power or market structure that concentrated on bank industry more influential on the profitability of banks? Secondly, whether macroeconomic cycle more influence on Indonesian bank profitability? And thirdly, whether Macroprudential regulation influence on bank profitability? Research about the role of Macroprudential regulation.Based on explanation above, this research is intended to study the things as follows:1. To review and analyze the impact on Indonesian macroprudential policies on performance of commercial banks in Indonesia.2. To study the impact of market power or market concentration on commercial bank profitability.3. To examine the relationship between economic cycle with commercial banks performance.4. To review and analyze interaction between market power or market concentration and macroprudential policy in conjunction with the profitability of commercial banks in Indonesia.To achieve those objectives, research methodologies develop in this paper based on the econometric model as a primarily tool using quarterly commercial bank data since 2007 until recently as a compliment to descriptive and statistical analysis.The hypothesis of this dissertation research is that the timely macroprudential policies are very important in maintaining the financial stability and an effective conventional monetary policy is important to stimulate economic output. However, the structure of market power or concentration of the commercial banks may be matter on effectiveness of macroprudential policy. Moreover, several Indonesian banking policies had been taken during the global financial crises in the year of 2008/2009 could be used as a learning lesson to reach the ultimate objective of Indonesian sustainable economic growth while maintaining macroeconomic stability