Indonesian Financial Services Authority Research Articles

Post-Issue of Sustainability Report: Does Market Valuation Improve?

Following the increased concern on sustainability reporting in Indonesia, this study attempts to investigate whether the issuance of sustainability report is able to provide positive impact on bank reputation and market valuation. We use a set of unbalanced panel data that consist of 43 Indonesian listed banks throughout 2010-2018 while our analysis is performed with panel data regression using STATA statistics software. Overall, the findings demonstrate that environmental disclosure provides positive impact on market valuation while economic and social disclosure do not. We also find the mediating role of bank reputation between the link of environmental disclosure and market valuation. By splitting the observation period into pre and post sustainable finance roadmap implementation, we find that economic disclosure holds significant contribution to increasing market valuation in the period before sustainable finance roadmap implementation while social and environmental disclosure demonstrate positive effect in the period when sustainable finance roadmap is implemented. This study, however, still contains limitation due to the use of content analysis in assessing sustainability report quality that may contain subjectivity issue. Further studies can obtain external assurance from independent experts in this subject. The use of quantitative-qualitative mixed method may also be a solution to solve this issue. This study provides several implications. Firstly, this study supports the regulation from the Indonesia Financial Service Authority to increase the participation of Indonesian banks in sustainability reporting in which the implementation must be followed with high regulation enforcement. We also suggest the practice of sustainability reporting for Indonesian listed banks as it gives considerable benefit in higher market valuation. This research addresses the gap in Indonesian literature that is limited on determinant study by providing more insights on how sustainability reporting provides on higher bank reputation and market valuation.

Risk Disclosure and Earnings Quality in Indonesia Banking Industries: Fair Value, Diversification, Financial Stability

High earnings quality can reflect a company’s actual performance. Stakeholder needs high earnings quality as earnings information is used for decision-making by stakeholder. This study investigates the effect of fair value, diversification, and financial stability on earnings quality and the roles of risk disclosure in moderating these effects. This study employs secondary data sourced from annual reports available at www.idx.com. The sample used in this study is bank companies from 2016 to 2020. Using purposive sampling, the sample obtained in this study was 180 observations. The research data were analyzed using multiple linear regression for panel data. This study suggested that fair value does not affect earnings quality. Other than that, diversification positively affects earnings quality while financial stability negatively affects earnings quality. Furthermore, risk disclosure failed to moderate the effect of fair value, diversification, and financial stability on earnings quality. This study indicates that the Indonesian Financial Services Authority needs to regulate the bank's diversification and risk disclosure policies. Moreover, the Indonesian Financial Services Authority should maintain and improve the bank’s financial stability policies.

HARMONIZATION OF ENVIRONMENTAL LEGAL POLICIES WITH BANKING REGULATION IN INDONESIA

The banking industry plays a crucial and strategic part in efforts to manage and safeguard and take care of the earth. The bank's performance in environmental protection can be achieved by involving the purpose of preserving the environment of life in its business activities, one of which is through the provision of environmentally sound loans. These financial institutions must put forward the sustainable development goals. The current problem is that there is no regulatory firmness that specifically regulates the synergy between environmental law and banking law in a standardization of compliance of banking business activities, especially in the arrangement of environmentally sound lending and borrowing agreements. Therefore, researchers conduct research with the normative legal approach method by collecting primary, secondary and tertiary data using the rules and regulations in laws, books, journals, both the internet. This paper aims to examine the harmonization between environmental law in banking activities, suggest it to the Indonesian Financial Services Authority as well a concept of harmonization and synchronization of banking and environmental regulations by applying sustainable finance principles in a regulation internal banking credit policy.

Determinan Pengungkapan Kebijakan Anti Korupsi Ditinjau dari Good Corporate Governance dan Reputasi Auditor

Corruption is a major challenge as well as a problem in an organization or business. Economic development will weaken and corporate accountability will be lost due to corruption. As a result of corruption, it will have a negative impact in various fields, including on the country's economy. For this reason, company awareness is needed in disclosing anti-corruption policies as a form of minimizing the occurrence of corruption in the business world. Even the Indonesian Financial Services Authority (OJK) also explains the recommendations for disclosing anti-corruption policies to every company that goes public in its annual report. The internal control mechanism can be a key factor in fostering information disclosure so that it will reduce the potential for loopholes for acts of fraud. Good Corporate Governance (GCG) is intended as a tool that minimizes fraud. In addition, by using a reputable public accounting firm, it is hoped that it can also show a more convincing and quality reputation and will be more motivated to disclose information, especially related to efforts to prevent corruption. The purpose of this study is to determine the effect of Good Corporate Governance (board of directors size, board of commissioners' independence, audit committee meeting frequency, and governance committee) and auditor's reputation on anti-corruption policy disclosure. This research uses all companies listed on the Indonesia Stock Exchange in the 2019-2021 period using a purposive sampling method. From 1739 companies, the results obtained were that the independence of the board of commissioners, governance committee, and auditor reputation had a positive effect on disclosing anti-corruption policies. Meanwhile, the size of the board of directors and the frequency of audit committee meetings have no effect on anti-corruption policies.

Value relevance of IFRS 9 adoption: A case study of Indonesian banking companies

Research aims: This study examines the effect of allowance for impairment losses (CKPN) on value relevance.Design/Methodology/Approach: This research employed quantitative data using secondary data from banking financial reports derived from www.idx.co.id during 2019-2021. Also, this study used stock price data sourced from www.finance.yahoo.co.id. The use of data for 2020 was due to the first year of PSAK 71 implementation. While data for 2019 were employed to compare the year before the PSAK 71 implementation, and data for 2021 were used to compare the PSAK 71 implementation in the second year. Data testing was then performed utilizing multiple linear regression analysis for cross-section data.Research findings: This study suggests that CKPN was positively associated with the value relevance of earnings in the first year of PSAK 71 implementation.Theoretical contribution/Originality: This research is expected to complement the financial accounting literature on adopting IFRS 9, especially in Indonesia, which is rarely discussed in previous studies.Practitioner/Policy implication: This study is expected to be employed by the Indonesian Financial Services Authority in improving policies on financial stability in the capital market based on applying financial accounting standards.Research limitation/Implication: This study only employed data on banking sub-sector companies listed on the Indonesia Stock Exchange, which were relatively small in number. Future research can therefore use data from all financial companies in Indonesia or banking companies in other countries related to IFRS 9 implementation to compare the test results with this study.

WHO IS THE MOST AUTHORIZED TO ERADICATE ILLEGAL FINANCIAL INSTITUTION ?

Illegal financial institutions have repeatedly appeared and disappeared in the community. Illegal banks or savings institutions disguise their businesses as travel agents or public fund savings institutions called arisan. At the moment, there have been emerging illegal online loan institutions (Pinjol). In 2021, illegal online loans (Pinjol) become a trending topic in Indonesia. Illegal lending has become a long-standing issue in society. The authorities have carried out the eradication of illegal lending. However, illegal borrowing is never completely eradicated and is always present in the community. Illegal borrowing has also caused a lot of community problems. This research aims to examine the illegal borrowing in the midst of society. This research uses a normative juridical method. This research concludes that eradicating illegal lending is the responsibility of the police, not the responsibility of the Indonesian Financial Services Authority (OJK). Even though illegal lenders operate in the financial industry, the Indonesian Financial Services Authority has no authority over the illegal financial industry. The authority of the Indonesian Financial Services Authority has been confirmed in Law of the Republic of Indonesia Number 21 of 2011. The illegal financial industry does not only exist in the financial technology industry, but has also emerged repeatedly in the conventional financial industry, such as illegal banks, fraudulent investments, and credit unions.

Legal Reconstruction of Financial Technology Crime Sanction Regulations Based on Pancasila Justice

In a very rapid economic development, it cannot be denied that the absorption of credit in people's lives is growing rapidly. In this case, in all the use of products or services by consumers, consumers have the right to obtain legal certainty corporate bullying billing financial technology is one of the most publicly highlighted violations of law today. This study has 2 (two) main problems, namely to identify and analyze the weaknesses that result in the implementation of criminal sanctions regulations in financial technology criminal cases in Indonesia that are currently not fair and attempts to reconstruct criminal sanctions regulations in financial technology criminal cases based on Pancasila justice. This research method uses a juridical-empirical approach. Analysis of primary and secondary data is carried out using a descriptive-analytical method. The results of the research and discussion show that the weaknesses that result in the implementation of criminal sanction regulations in financial technology crime cases in Indonesia are that they do not contain criminal threats for violating the provisions of Article 44 paragraph (1) of the Republic of Indonesia Financial Services Authority Regulation Number 10/Pojk.05/ 2022 Regarding Technology-Based Co-Funding Services. Efforts to reconstruct the regulation of criminal sanctions in financial technology crime cases based on Pancasila justice, namely by adding criminal provisions to the criminal provisions in Article 44 of the Regulation of the Financial Services Authority of the Republic of Indonesia Number 10/Pojk.05/2022 Concerning Information Technology-Based Joint Funding Services by adding one paragraph. So that the provisions in Article 44 of the Regulation of the Financial Services Authority of the Republic of Indonesia Number 10/Pojk.05/2022 Concerning Information Technology-Based Joint Funding Services.

Maqashid Sharia Performance In Indonesian Islamic Banks: The Role Of Intellectual Capital And Sharia Supervisory Boards Cross-Membership And Gender Diversity

This study will examine the link between intellectual capital and maqashid sharia performance as well as the moderating effects of cross-membership and gender diversity of the sharia supervisory board to improve the influence of intellectual capital on maqashid sharia performance. The secondary source of data for this study was the yearly financial statements listed in the Indonesian Financial Services Authority between 2008 and 2020. The data analysis method used in this inquiry was a panel data regression model. The analytical techniques employed in this work include descriptive statistical tests, preliminary tests, and hypothesis testing. According to the results of the three preliminary tests that were used to develop the panel data regression model, this study uses the random effect model in models 1 and 2 to evaluate the relationship between intellectual capital elements and maqashid sharia performance. Cross-membership and the gender of SSB women are moderating factors. The results of this study show that intellectual capital influences Indonesian Islamic Banks' performance following maqashid sharia positively. This suggests that making better use of intellectual capital can improve a company's maqashid sharia performance. Cross-membership has a negative impact on maqashid sharia's performance, demonstrating that it will hinder the board's ability to focus and function effectively, which will lead to a decrease maqashid sharia performance. The results of this study demonstrate that the average female representation on the sharia supervisory board is only 4% of the total samples, meaning that it cannot affect maqashid sharia performance. Therefore, the female gender of the sharia supervisory board has no impact on maqashid sharia performance. In this study, there was no empirical support for the claim that gender diversity and cross-membership on sharia supervisory boards may increase intellectual capital for maqashid sharia performance.

Determinants of Financial Performance with Islamic Financial Technology Moderation in Sharia Commercial Banks in Indonesia

The research aims to examine and analyze the determinants of financial performance with the moderation of Islamic financial technology in Islamic commercial banks in Indonesia. The type of research used is classified as quantitative with an explanatory approach. The data used in this study is a type of secondary data. The population and sample in this study are six Islamic commercial banks registered with the Indonesian Financial Services Authority (OJK). Data management and analysis techniques were carried out by inferential analysis and Partial Least squares (PLS). The results of the Direct Effect Research show that: 1) firm size has a negative and significant effect on Financial Performance in Islamic commercial banks in Indonesia. 2) the current and debt-to-equity ratios have a negative and insignificant effect on Financial Performance in Islamic commercial banks in Indonesia. 3) Moderation of Islamic Fintech significantly strengthens the influence of Firm Size on Financial Performance in Islamic commercial banks in Indonesia. 4) Moderation of Islamic Fintech significantly strengthens the influence of the Current Ratio on the Financial Performance of Islamic commercial banks in Indonesia. 5) Moderation of Islamic Fintech significantly strengthens the influence of the debt-to-equity ratio on the Financial Performance of Islamic commercial banks in Indonesia. This study concludes that: 1) firm size with many total assets does not necessarily mean the company has a significant profit. It could decrease company profitability if these assets are not utilized and managed properly and efficiently. Companies with significant assets can utilize and support business development operations to maximize profits and increase company profitability. 3) The high current ratio indicates excess current assets, affecting the company’s profitability. The reason is that a high current ratio is only sometimes good because it will show excess current assets that are not used effectively, which can lead to a smaller level of profit or profitability, resulting in lower profitability. 3) a high debt-to-equity ratio indicates the availability of significant funds from the use of debt for company operations to increase the profitability of Islamic banks. Banks that finance their assets with debt cause their profitability to decrease because banks have to pay the costs that must be incurred due to the use of debt. 4) With Islamic fintech as a moderator between firm size, current ratio, and debt to equity ratio, Islamic fintech can optimize financial performance because by adopting fintech in Islamic banking among the public, it is easier to transact online because Islamic Fintech provides various services such as payment zakat, health, and lending as well as transfers between banks.

ARE SUSTAINABILITY DISCLOSURE AND TAX AVOIDANCE ASSOCIATED WITH THE COST OF DEBT?

Abstract— This study examines whether sustainability disclosure and tax avoidance affect the cost of debt. The research data was obtained from financial statements, annual reports and sustainability reports of property and real estate sub-sector companies in Indonesia listed on the Indonesia Stock Exchange (IDX) for the period 2017 to 2020. Data sourced from www.idx.co.id, www.idnfinancials.com and the authorized company's websites. Based on purposive sampling, the total sample used in this study amounted to 104 observations. Hypothesis testing is conducted by using multiple linear regression analysis for cross-section data. The study results conclude that sustainability disclosure and tax avoidance are not associated with the cost of debt. This research indicates that the Indonesia Financial Services Authority should increase supervision over sustainability and company policies to finance companies through debt made by listed companies.
 
 Keywords: Cost of Debt; Tax Avoidance; Corporate Social Responsibility

The Regulation of Disorgement in the Indonesia Capital Market: Remaining Concerns and Lessons from US

This study aimed to analyse the authority that recently empowered the Indonesia Financial Services Authority (OJK) based on OJK Regulation Number 65/POJK.04/2020 in conjunction with OJK Circular 17/SEOJK.04/2021. OJK was empowered to pursue disgorgement in the Indonesian capital market as a new tool for protecting investors by analyzing changes in disgorgement enforcement practices in the US. This study used a doctrinal legal method with a comparative approach. The comparative approach was used to examine the possibility of strengthening disgorgement enforcement applicable to current Indonesian law on such practices in the US. Disgorgement in Indonesia is similar to the previous one in the US. The disgorgement authority in the Capital Market Act was not explicit because OJK still interpreted “written orders” such as “grant relief ancillary to an injunction” when disgorgement was first introduced by the SEC. This poses challenges in calculating the number of disgorgements that may be limited or canceled due to a lack of strong legal remedies when the violator does not pay the disgorgement. Considering practical experience in the US from Texas Gulfur Sulfur to Kokesh and Liu, disgorgement in Indonesia needs strengthening to maintain enforcement sustainability and avoid setbacks. Therefore, the strengthening should involve placing the disgorgement authority in the Capital Market Act, providing Standard Guidelines for the Calculation of Disgorgement Amounts and and establishing regulations on Procedures for Civil Lawsuits by OJK. The results are expected to be a reference for regulators and legislators to improve enforcement of the disgorgement regime in Indonesia.

Kepemilikan CEO Dalam Hubungan Antara Kebijakan Utang Dan Kebijakan Dividen

This research aims to show the effect of debt policy on dividend policy and the moderating role of chief executive officer (CEO) share ownership in the relationship between debt policy and dividend policy. Data on the financial reports of companies in the non-financial sector listed on the Indonesia Stock Exchange from 2008 to 2020 are used as research data. Research data is sourced from www.idnfinancials.com and the company's official website. The number of samples used in testing this research was 454 observations based on purposive sampling. Data analysis in this research used logistic regression. This research shows the results that debt policy has a negative effect on dividend policy. In addition, CEO share ownership weakens the negative effect of debt policy on dividend policy. This research shows that the Indonesian Financial Services Authority needs to improve governance, especially concerning investment protection on the Indonesian Stock Exchange.

DEBT POLICY, SALES GROWTH, TAX AVOIDANCE: THE MODERATING ROLE OF INDEPENDENT COMMISSIONERS

This study examines the effect of debt policy and sales growth on tax avoidance. In addition, this study examines the role of the independent commissioner as a moderating variable in the relationship between the independent and dependent variables. The method employed in this study is quantitative. This study uses secondary data with the annual financial statements of mining sector companies listed on the Indonesia Stock Exchange for 2018-2020. Research data is sourced from www.idx.co.id and the company's official website. Based on purposive sampling, the total sample of this study resulted in 103 observations. The data analysis technique used is multiple linear regression with a cross-section, namely Ordinary Least Squares (OLS). The results of this study suggest that debt policy is negatively associated with tax avoidance, while sales growth is not associated with tax avoidance. This study also suggests that independent commissioners cannot moderate the association between debt policy and tax avoidance. Also, independent commissioners could not moderate the association between sales growth and tax avoidance. This research indicates that the Indonesia Financial Services Authority needs to improve policies related to the arrangement of independent commissioners in publicly listed companies regarding protecting shareholders in the capital market and improving corporate governance listed on the Indonesia Stock Exchange.

Managerial Models and Their Contribution to the Successful Use of Financial Applications

This study examines the suitability of the managerial model (the strategy, support and competence of managers) on the successful use of financial applications for insurance companies registered with the Indonesian Financial Services Authority (OJK). Quantitative methods used to confirm the proposed model and predict the magnitude of the influence that arises between the variables studied. Primary data was collected by distributing questionnaires to 313 accounting and finance managers of insurance companies registered OJK Indonesia and 160 sample sizes were collected through a simple random technique. Data analysis used Covarian Base Structural Equation Model (CB-SEM) with Lisrell 8.5 software. The results of this study have succeeded in confirming the conceptual model developed by researcher and proving that managerial model variables have an effect on the successful use of financial applications in insurance companies registered OJK Indonesia. This research proves that the successful of using financial application depends on the relevance of the user. The Managerial Model shows that the right management strategy and top management support as well as adequate managerial competence effectively make the system more flexible, integrated, easy to access which in turn creates user satisfaction and intensive use of the system in an organization. The successful use of applications in an organization encourages the company's operational activities to run effectively and efficiently and to achieve competitive advantage

How Do Indonesian Listed Companies Disclose Information Related to Whistleblowing?

This study evaluates how Indonesian public listed companies (PLCs) facilitate whistleblowing and the extent to which they disclose its implementation through annual reports. Data were collected from 68 PLCs of Indonesian Stock Exchange (IDX). Using content analysis of annual reports and website analysis of the PLCs, this study found the companies prefer annual reports than website as the medium to disclose whistleblowing-related information. The disclosure of information on whistleblowing is relatively vary in depth and comprehensiveness. This study also indicated companies’ reluctance to enclose whistleblowing-related information though it has been obligated by the Indonesian Financial Services Authority (or Otoritas Jasa Keuangan/ OJK). Such reluctance can be associated with the absence of penalty for non-disclosers. This study revealed the interconnection between organization features and whistleblowing system. Thus, the companies do not provide fully information on whistleblowing system to prevent unintended consequences resulted from the disclosure and in turn, to indirectly unjustify the role of the whistleblowing system as a part of effective anti-corruption and anti-fraud strategy.

Does independent commissioner have a role in the relationship between sustainability disclosure, debt policy, and tax avoidance?

This study examines the effect of sustainability disclosure and debt policy on tax avoidance. It includes an independent commissioner as a moderating variable. This study employed a quantitative method and secondary data obtained from financial reports and annual reports of companies in the consumer goods sector in Indonesia which are listed on the Indonesia Stock Exchange (IDX). Data were obtained from www.idx.co.id, www.idnfinancials.com and the company's official website. The research sample comprised 52 companies which were observed through 220 observations between 2017 and 2020. The hypothesis testing in this study was conducted by using multiple linear regression analysis for panel data. The results of this study suggest that sustainability disclosure and debt policy are negatively related to tax avoidance. Furthermore, independent commissioner does not have a moderating role in the relationship between sustainability disclosure and tax avoidance. Meanwhile, independent commissioner strengthens the negative relationship between debt policy and tax avoidance. This study indicates that the Indonesia Financial Services Authority needs to improve policies in selecting independent commissioners from listed companies in Indonesia to improve corporate governance implementation.

Determinants of non-performing financing in Indonesian Islamic banks: A regional and sectoral analysis

This study examines the determinants of Islamic banks’ non-performing financing from the perspective of regional and sectoral aspects during the periods before and during the pandemic. The study adopts a dynamic panel data analysis, namely the Generalized Method of Moments, and assesses panel data from the Indonesian banking industry in 32 provinces from October 2018 to July 2021 on a monthly basis. The study uses non-performing financing as the dependent variable and regional inflation, total financing, financing to deposit ratio, and Islamic bank size as the dependent variables. The findings indicate that the COVID-19 pandemic generally influenced the performance of non-performing financing in Islamic banks. This was evident in the significant relationship between regional inflation, total financing, financing to deposit ratio, and the non-performing financing value. Moreover, in the sectoral analysis, a different level of impact was observed in each sector. The most severe impact was seen in the construction sector, while other sectors were less affected during the pandemic. The regional analysis shows that all provinces on Java Island, as the epicenter of the pandemic in Indonesia, did not perform better than the provinces outside Java. Concerning policy implications, the Indonesian Financial Services Authority must be more aware of the determinants of Islamic banks’ non-performing financing by considering sectoral and regional aspects. Furthermore, sectoral and regional-based policies should be developed to achieve and maintain the performance of Islamic banks’ non-performing financing. Acknowledgments We are grateful to the Pusat Pengembangan Ekonomi (PPE), Faculty of Business and Economics, Universitas Islam Indonesia No. 259/KajurIE/XII/2021 for support and providing a research grant for the study

Regulation of Standard Banking Credit Agreements by the Indonesian Financial Services Authority: A Consumer Protection

The standard agreement creates rights and obligations for both parties, namely having two choices to “take it or leave it”. Most standard agreements in practice have the potential to harm the weaker party. The difference in the position of the parties in an agreement can cause the party who has a lower position to have a less profit potential. This research is normative legal research using a descriptive-analytical approach and then analyzed qualitatively to produce conclusions in descriptive form. The results show that the Financial Services Authority as an institution that has the authority to regulate and supervise the banking industry in Indonesia has issued POJK Number: 6/POJK.07/2022 concerning Consumer Protection in the Financial Services Sector and SEOJK Number: 13/SEOJK.07/2014 concerning Standard Agreement in order to provide protection to consumers.
 Keywords: consumer protection, standard agreement, banking credit

Faktor-Faktor yang Berperan pada Literasi Keuangan Mahasiswa Muslim di Kota Serang

Various financial literacy education programs are organized by the Financial Services Authority to improve public financial literacy. Students and university students in general are the main focus of financial education efforts aimed at educating the general public. College students are one of the priority targets of the Indonesian Financial Services Authority's (OJK) financial education programs in Indonesia. The purpose of this study was to (1) assess the level of Islamic financial literacy among Serang college students and (2) investigate the factors that influence their level of Islamic financial literacy. The score of Islamic financial literacy was used as the independent variable in this study. The dependent variables are gender, university, Grade Point Average (GPA), information sources, and religiosity. The descriptive analysis and structural equation modeling partial least squares are used to analyze the data (SEM-PLS). According to the estimation results, the level of Islamic financial literacy among Muslim students in Serang is 50.2 percent, which is classified as sufficient literate. Gender and university were found to have a positive and significant influence on the level of Islamic financial literacy of Muslim students in Serang, according to the study.

ENVIRONMENTAL UNCERTAINTY, DEBT POLICY, TAX AVOIDANCE: DOES MANAGERIAL ABILITY MATTER?

This study examines the effect of environmental uncertainty and debt policy on tax avoidance. In addition, this study also examines managerial ability as a moderating variable in relationship between independent and dependent variables. The method used in this study is quantitative. This study utilizes secondary data from annual financial reports of property & real estate sector companies listed on the Indonesia Stock Exchange from 2018 to 2020. Based on purposive sampling, the total sample of this study amounted to 77 observations. The data derives from www.IDX.co.id and official company website. The analysis technique used is multiple linear regression for the cross-section data. The results of this study suggest that environmental uncertainty is not associated with tax avoidance, while debt policy is negatively associated with tax avoidance and indicates that managerial ability weakens the positive effect of environmental uncertainty on tax avoidance.
 Meanwhile, the managerial ability does not moderate the relationship between debt policy and tax avoidance. This research indicates that the Indonesia Financial Services Authority needs to supervise listed companies to increase protection for investors in capital market. In addition, the Indonesian Tax Authority needs to improve the income tax policy for corporate taxpayers related to company's capital structure.